Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Oral Answers to Questions — DEFENCE

Land Mines

Mr. Timms: To ask the Secretary of State for Defence what recent discussions he has had with his French counterpart on anti-personnel land mines. [26919]

Mr. Sutcliffe: To ask the Secretary of State for Defence what is his policy on the use of land mines; and if he will make a statement. [26921]

The Minister of State for Defence Procurement (Mr. James Arbuthnot): My right hon. Friend the Secretary of State for Defence is today attending the Western European Union Council of Ministers meeting in Birmingham and much regrets that he cannot be here.
We shall work actively for a total worldwide ban on anti-personnel land mines and keep in close touch with our allies about that issue. We welcome the outcome of the United Nations weaponry convention as an important step in the right direction.

Mr. Timms: Will the Minister join me in commending the ban introduced by the French Government on the

production, stockpiling and export of all anti-personnel land mines? Why have the British Government not done the same?

Mr. Arbuthnot: We need to balance the real need to protect our armed forces with the need to move towards reducing the humanitarian dangers posed by land mines. We believe that we have achieved the right balance. We are in close touch with the French and we believe that we are doing things similar to them.

Mr. Sutcliffe: Is that not a contradiction: on the one hand, seeking a worldwide ban; while, on the other, seeking to modernise our requirements? Does that not point to a lack of clarity in the Government's view?

Mr. Arbuthnot: When we seek to achieve a balance between two inherently conflicting aims—both of which are perfectly justified—it is inevitable that we shall not achieve one or the other in totality. There is a real need to protect our armed forces as well as to protect civilians from the increasingly damaging effect of the proliferation of land mines. For that reason, we have supported a total ban on anti-personnel land mines and we shall work hard to achieve that objective. We had hoped that that conclusion would come out of last week's United Nations weaponry convention. Unfortunately, we did not get that far. We would have liked to go further, but we were very pleased to progress as far as we did.

Mr. Menzies Campbell: Is the Minister aware of the recent International Committee of the Red Cross report which says that the military value of anti-personnel land mines is substantially overstated? Does that not give rise to the moral question: should any self-respecting nation deploy weapons that cause human agony to civilians on a scale out of all proportion to their military value?

Mr. Arbuthnot: Yes, I have seen and read that report. I disagree with its conclusions. We must remember also that we are trying to contend with the real issue of those


countries that proliferate land mines indiscriminately rather than monitoring them and using them carefully in accordance with the rules of law, as this country does.

Dr. David Clark: Does not the Minister's answer expose the Government's recent announcement that they would ban land mines as a sham of the highest order? The reality is that, at a time when most other countries are seeking to ban land mines altogether, the Government are planning to modernise their stock by purchasing brand new and more effective land mines. Where will the Minister get the new land mines? Does he plan to commission British companies to produce them or will we import them from a third country? Has he no shame in escalating the production of that most deadly and barbaric of weapons?

Mr. Arbuthnot: Some 30 countries, including the United Kingdom, are hoping to ban land mines altogether. At the end of his question, the hon. Gentleman raised an issue that I freely acknowledge to be genuine, and that needs to be addressed, but we have not made a decision to upgrade our land mines. If we do not achieve a worldwide ban on land mines, as we would like, we shall consider at the appropriate time—which is not now—improving our land mines so that they incorporate a self-destruct capacity, which our present land mines do not. It must be sensible to make the land mines that we decide to continue to use—if we are forced into that position—less dangerous to the civilian population whom we are trying to protect.

Mr. James Hill: Does my hon. Friend agree that the British arms industry cannot be blamed for the circumstances in some parts of the world, such as Cambodia? More money needs to be spent on those gallant groups that are searching for and destroying land mines and trying to make sure that village paths are clear and people can till their fields. Is there no fund that can be used to make sure those people are able to continue that work?

Mr. Arbuthnot: My hon. Friend raised an extremely important point. I am pleased to say that the United Kingdom has contributed nearly £20 million to the clearance of mines in countries such as Cambodia. That issue is very much to the forefront of our thinking. The mines used by British forces do not pose a threat to civilian populations.

Army Recruitment

Mr. Turner: To ask the Secretary of State for Defence if he will make a statement on his Department's ability to recruit personnel to the Army. [26920]

The Minister of State for the Armed Forces (Mr. Nicholas Soames): We have taken and will continue to take decisive and urgent action to ensure that the Army gets the 15,000 high-quality new recruits that it needs each year.

Mr. Turner: Is it not the height of incompetence that the Conservative Government have cut manpower

strength in the British Army by 25 per cent. and are failing to recruit new soldiers into the Army despite massive unemployment?

Mr. Soames: I am afraid that I cannot agree with the hon. Gentleman's spontaneous question. Although it is certainly true that the Army has been cut as a result of the greatly changed strategic setting and that certain sectors are finding recruitment difficult, for a number of different reasons with which the House is entirely familiar, not least of which is the present competitive job market, I am glad that we appear now to have turned the tide. In 1995, we saw a 33 per cent. increase in inquiries and a 25 per cent. increase in enlistment. We are not out of the woods yet, but we are well on the way.

Mr. Dover: Will the Minister review the policy that removed recruitment centres in high street shops, as that was an effective and cost-effective method of recruitment?

Mr. Soames: I am grateful to my hon. Friend, who is quite right to say that local recruiting centres are extremely valuable. A number of planned changes have been halted, pending the results of a trial that is proving most successful and involves working with our friends in the jobcentres. I am happy to give my hon. Friend that assurance and confirm that they are indeed valuable sources of recruits.

Mr. Spellar: Does the Minister now accept responsibility for the huge waste of public money in spending £500 million on redundancy and £100 million on recruitment in one year alone? Can he explain to the House how handing out compulsory redundancy notices would make recruitment attractive? Will he admit that his Department's handling of Army recruitment has been staggeringly incompetent?

Mr. Soames: One of the reasons why the Conservative party will win the next election is that it is quite plain that the Opposition do not understand defence or how it is run. It is also quite plain that, during a period of drawdown, services need to recruit at all times. They need to refresh the specialisations and aid structure at all ranks. Quite clearly, during a period of drawdown, the perception is that the forces no longer need to recruit. We have addressed that with vigour and determination and our policies are gaining all the time. The hon. Gentleman's question was a pretty facile attempt at a rather poor soundbite.

Mr. Nigel Evans: Will my hon. Friend confirm that, if the Government were to adopt Labour's policy and reduce defence expenditure of £4.5 billion to the European average, that would have a massive impact on personnel in the Army and other armed services and on equipment procurement, which would place in jeopardy the defence of the realm?

Mr. Soames: My hon. Friend is completely right. Such a policy would not only greatly harm the interests of the United Kingdom, whose armed forces are such a golden asset, but would seriously damage the job security of all the splendid young men and women who serve in our three forces and the interests of British industry, which provides such splendid equipment for our forces.

RB-44 Army Light Vehicle

Mr. Davidson: To ask the Secretary of State for Defence if he will make a statement concerning the RB-44 Army light vehicle. [26922]

Mr. Arbuthnot: I am pleased that, as a result of the programme to resolve the braking problems that we had with the Reynolds Boughton RB-44 heavy utility truck, the vehicles are now re-entering service with the Army.

Mr. Davidson: Does the Minister agree that that was a poor answer for someone who has just rushed all the way from Glasgow to receive it? The vehicle's history is a litany of incompetence by the MOD and the private sector builder. Does the Minister agree that the matter would be far better passed to the National Audit Office for investigation?

Mr. Arbuthnot: No, I do not agree—I thought that it was rather a good answer. Of more than 800 vehicles that we bought, nearly two thirds are back in service with the Army, and the others are awaiting modifications. The modifications are relatively minor and the company is meeting the cost of providing kits to make them.

Type 23 Frigates

Dr. Spink: To ask the Secretary of State for Defence if he will make a statement on the advantages to the Royal Navy and to the United Kingdom of the Government's recent order for three type 23 frigates. [26923]

Mr. Arbuthnot: The order will provide a major enhancement to the Royal Navy's escort fleet and show the Government's commitment to first-class equipment for the armed forces. The order is worth around £400 million and will bring work to Yarrow and companies across the UK.

Dr. Spink: Does my hon. Friend agree that his answer illustrates two incontrovertible facts—that the UK continues to maintain the most professional, formidable and technologically superior armed forces; and that the great benefits to Scotland of remaining in the UK extend further than the Yarrow shipyard?

Mr. Arbuthnot: I agree. We have ordered some highly capable ships at a most affordable price, and by placing that order we have ensured the continuation in British industry of a capability that we need to see continued. The order is good news for the UK and for Scotland.

Procurement Projects

Mr. Hutton: To ask the Secretary of State for Defence how many of his Department's major procurement projects have late in-service dates. [26924]

Mr. Arbuthnot: The Ministry of Defence's most recent annual major projects report to the Public Accounts Committee showed that, of the projects covered, 21 were reported as having late actual or planned in-service dates.

Mr. Hutton: Is it a fact that the last National Audit Office inquiry showed that 90 per cent. of major

procurement contracts had late in-service dates? Are not there significant delays in placing major new contracts, particularly in respect of the batch 2 Trafalgar class replacement programme? Why should defence industry workers pay the price of the Government's total and complete incompetence in managing the nation's procurement budget?

Mr. Arbuthnot: It is not a question of incompetence. There is a natural tendency towards delay in a large number of defence contracts. That is partly because trying to match the requirements of different countries to a collaborative project is extremely difficult, and partly the effect of increasing and speedily advancing new technology. Delay can actually bring benefits. If there is delay in acquiring a piece of equipment, it can mean a better piece of equipment, and sometimes one that is cheaper.
The greatest example of a UK technological project was the Trident system. The hon. Gentleman may agree, although I suggest that he has a word with some of his colleagues on the Opposition Benches, who might not share his views. The Trident system has been an 11-year project that has come in on time and under budget. It has provided a defence of this country beyond all proportion to the amount of money that we have spent on it.

Mr. Mans: Does my hon. Friend agree that the one way to ensure that all procurement projects do not meet their in-service dates is to carry out a full-scale defence review, as advocated by the Opposition? That would have a devastating effect on jobs in the defence industry, especially in my county of Lancashire, which depends so heavily on defence industries.

Mr. Arbuthnot: My hon. Friend is right. I have always believed that the Opposition want to carry out a major defence review because they lack the courage to say what they really want to do, which is to make deep defence cuts. We know that they want to do that. My hon. Friend raises the point that a defence review would mean that equipment procurement would come to a standstill, and that would be the effect of electing a party that we know we cannot trust on defence.

Royal Navy

Mr. Eric Clarke: To ask the Secretary of State for Defence what was the strength of the Royal Navy in 1990; and what will be the strength of the Royal Navy under current plans by the end of the decade. [26925]

Mr. Soames: The total strength of the Royal Navy on 1 April 1990 was 63,000. The estimated strength for 1 April 1999 is some 44,000, including the Royal Marines and personnel undergoing training.

Mr. Clarke: Will the Minister explain how he reconciles the fact that the Conservative manifesto in 1992 stated that a cut of 27 per cent. in the armed forces would be devastating with the 30 per cent. cut in the Royal Navy?

Mr. Soames: I know that the hon. Gentleman, living in the wonderful time warp of Midlothian, will not have noticed that there has been an extraordinary change in the


strategic setting that governs the deployment and support structures of our armed forces. Manpower strength is not the prime determinant of the Navy's military capability. The Navy today is probably better equipped and better manned than it has ever been. It is performing a fantastic job and I pay tribute to its extraordinary professionalism and to the way that the Navy has coped with the changes. Today, there are more than 46 British ships at sea, 25 on Exercise Purple Star, and many others promoting Britain's interests in a professional manner, which is very advantageous to this country.

Mr. David Martin: Can my hon. Friend confirm that—as I find in Portsmouth—while the Navy is smaller, morale is high and the professionalism with which it goes about its tasks is second to none? Does my hon. Friend know of any proposals from Labour or the Liberal Democrats that would increase the efficiency of the Royal Navy or increase the numbers of people who serve in it?

Mr. Soames: I am grateful to my hon. Friend and I know that the Royal Navy is grateful for his support in Portsmouth. He is right to point out that morale in the Royal Navy is high. The personnel of the Royal Navy are working hard and are away from home rather more than we would like, but they do a remarkable job. I know of no such proposals from the other parties and the only proposals that we have heard are those that are likely to harm gravely the Royal Navy and the defence interests of the United Kingdom.

Mr. Dalyell: Does the Minister know anything about Midlothian? Can he name one town in the county?

Mr. Soames: What I know about Midlothian, one could write on the back of a very large stamp. I know that it is a marvellous and wonderful place in Scotland and that it is lucky enough to have the hon. Member for Midlothian (Mr. Clarke) as one of its Members of Parliament. The hon. Member for Linlithgow (Mr. Dalyell) made Midlothian famous by the Midlothian question, to which we are all waiting to hear the answer.

Lady Olga Maitland: Does my hon. Friend agree, further to his remarks, that it is not manpower alone that is needed for the Navy of the future, but high technology? Does he further agree that our ships are now equipped with the best technology that this country can provide and that we need to have a sense of priorities so that we are fit and capable of fighting into the next century?

Mr. Soames: My hon. Friend is right. The Royal Navy is probably technologically better equipped now than it has ever been. As my hon. Friend knows, the acquisition of Tomahawk will greatly expand its opportunities, and the type 23 frigate, which my hon. Friend the Member for Castle Point (Dr. Spink) has just mentioned, is not only a more sophisticated ship in every way, both technologically and in terms of capability, but requires 30 per cent. fewer crew than its predecessor while being a far more powerful ship. Those are the ways in which we are going and they are inevitably the ways in which technology drives the armed forces. Britain is at the forefront of taking advantage of all those exciting new opportunities.

Mr. Murphy: How can we take the Minister seriously when he talks about either the geography of Midlothian

or about defending and preserving our Navy, when it is his Government who have presided over the rundown of the fleet and issued thousands of redundancy notices to Navy personnel? Can he not see that not only the Royal Navy but all three armed services have nothing for which to thank the Government and are as anxious as everyone else in Britain to get rid of them?

Mr. Soames: My geography may be a bit rusty, but I do not think that West Lothian is that far from Midlothian. However, I apologise to the hon. Member for Linlithgow, and to Mr. Gladstone.
Again, the hon. Gentleman, like so many of his hon. Friends, is living in a complete time warp. [Interruption.] New Labour is no more new Labour than jump the moon; it is just old Labour in a new suit of clothes. The Royal Navy, unlike the Labour party, has genuinely moved on. It has moved on to embrace new technologies, new equipment and new ways of producing the support that it needs. It has done that with great skill and it has managed the transition extremely effectively. It deserves great credit. The kind of arrant nonsense talked by the Opposition again more than confirms the fact that all Conservative Members know in our hearts that, primarily because the Labour party cannot be trusted with defence, we shall win the next election.

Forces in Europe (Deployment)

Mr. Booth: To ask the Secretary of State for Defence if he will make a statement on the extent of deployment of Her Majesty's forces in Europe. [26926]

Mr. Soames: British forces are currently deployed in Germany, Cyprus, Italy, Gibraltar, the Adriatic and the Mediterranean, and they make a significant contribution to the peace implementation force in Bosnia.

Mr. Booth: Will my hon. Friend congratulate our forces serving in IFOR? Does not the success of their deployment there show that the proposal to put them under the European Union command is not only unwanted, but unnecessary?

Mr. Soames: Yes, I agree with my hon. Friend. I join him in warmly congratulating the performance of the 10,500 British troops on the ground in Bosnia and the further 1,200 Royal Navy and Royal Air Force troops offshore and in Italy. They have performed outstandingly well and done great credit to this country. It is plain, when NATO had to go in, that it was the only organisation in Europe that could possibly have run such an operation because it has the command and control structures and the necessary equipment, kit and experience to undertake such an operation. It certainly would not be an operation for the Western European Union or for the European Union.

Dr. Reid: We welcome the decision to deploy four squadrons of Tornado from RAF Brüggen and its associated facilities. It is sensible on operational and financial grounds. We also welcome the reports at the weekend that the most fundamental strategic review of doctrine since the second world war is currently being carried out within the Ministry of Defence. We are glad that, despite the shouting from the Government Benches,


the Government are doing exactly what we suggested. We are happy on this occasion that they should keep shouting one thing and doing another. It will make it so much easier for the next Labour Government.

Mr. Soames: I thought for a second that the hon. Gentleman was talking about the Labour party's policy on homosexuals, but clearly not. I must disabuse the hon. Gentleman of one illusion. There is nothing fundamental about the review. It is a drawing together of strategic doctrine to reflect the new joint operational structure of the Ministry of Defence, the establishment of the new permanent joint headquarters and the creation of the joint rapid deployment force, all of which I know will have passed the hon. Gentleman by.
There is nothing secret about it. Consultation will take place not only within the Ministry of Defence and across all three services, but with academics and many others. That is a serious and sensible response to a strategic doctrine which the country has been putting into practice for a long time; but, following the creation of the joint rapid deployment force and the permanent joint headquarters, the elements of that response need to be drawn together.
I am grateful to the hon. Gentleman for what he said about Brüggen. We believe that we are taking a sensible step. Although I regret the fact that there will no longer be an RAF presence in Germany after a long and glorious history, there is no doubt that that is right not only for all the people concerned, but for the aircraft.

Mr. Wilkinson: I, too, greatly welcome the Government's decision to bring the RAF back from Germany: following the disbanding of the Warsaw pact, it makes evident sense. May I. however, urge the Government to bring the squadrons back from Laarbruch before 1999 and from Brüggen before 2002? It would make sense to have aircraft flying from RAF Honington again, and to have RAF Scampton open again, thus providing jobs for British people.

Mr. Soames: I am grateful to my hon. Friend, and acknowledge his expertise. He will appreciate that we have consulted our allies closely, and have assured them that our commitment to NATO remains unaffected. The four Tornado GR1 squadrons will be returned to existing United Kingdom bases.
I note what my hon. Friend said about Honington and Scampton, and I have no doubt that we shall consider carefully what to do. As a matter of fact, we believe that the redeployment of the aircraft in the United Kingdom will potentially increase their operational effectiveness. We hope that we shall soon be able to announce where they will be based, but I shall certainly bear in mind what my hon. Friend has said.

Trident Missiles

Mrs. Fyfe: To ask the Secretary of State for Defence how many Trident missiles are to be ordered in each year from 1997 under present orders; and what will be the total number bought when all orders are acquired. [26927]

Mr. Arbuthnot: So far, the UK has purchased 44 Trident missiles from the United States. No UK missiles are on order, but remaining orders are likely to be placed within the next three years in line with the UK's

programme and the US's overall procurement strategy. Some initial financial commitment to that end has been made.

Mrs. Fyfe: Has the Minister noted that, according to the United States strategic command report to Congress, the number of missiles on order from the United Kingdom will be seven in 1997, seven in the following year and seven in the year after that—a total of 21, in addition to the existing 44? Can the Minister tell us the reason for that huge escalation?

Mr. Arbuthnot: The figures that have emerged in the United States amount to no more than the assessment of our current financial plans. We have not made a final decision on the figures, but they reflect our current plans, and they do not represent an escalation in relation to our Polaris firepower.

Mr. Brazier: Will my hon. Friend confirm that nuclear threats in the world, potential and actual, are expanding, despite the fall of the Berlin wall? Two, or possibly three, ex-Soviet countries still have nuclear weapons, and nuclear technology is proliferating in the middle east. Is it not essential that we in the Conservative party are seen to uphold Britain's strategic nuclear deterrent?

Mr. Arbuthnot: Yes. As is so often the case, my hon. Friend has made a valid point. The Labour party aspires to power, but many Labour Members would like Trident to be abolished. We are faced with questions on Trident with which we would not be faced if Labour had won the last general election, or the one before that, or the one before that—because we would not have a nuclear missile at all.

Cadet Forces

Mr. Riddick: To ask the Secretary of State for Defence what assessment he has made of the educational advantages that membership of the cadet forces gives to its members. [26928]

Mr. Soames: My colleagues and I are very much aware of the splendid benefit that the cadet force organisations can bring to the education and well being of young people in this country. It is important that parents and teachers alike recognise the wonderful opportunities that membership brings to the broad education of the young.

Mr. Riddick: Is my hon. Friend aware that there are active squadrons of the air training corps in Holmfirth and Huddersfield in my constituency and that they both play a valuable role in local community service? Does he agree that the education of those youngsters should include the facts about the Labour party's natural aspirations to cut defence spending by billions of pounds, so that the country's young people are aware that the nation's defences would not be safe under a Labour Government?

Mr. Soames: My hon. Friend is completely right, of course. I join him in paying tribute to the air training corps in Huddersfield, which on average parades 60 cadets, and in Holmfirth, which on average parades 30 cadets. They have an exceptional record in the Duke of Edinburgh award scheme and an excellent commitment to


community service. I also pay tribute to those who take part in the cadet forces, especially all the adults who give up their time to help and provide leadership. Frankly, the less the young know about Labour party policies the better.

Ms Walley: Will the Minister also pay tribute to the air training corps in my constituency? Does he share my concern, having read page 11 of today's edition of The Daily Telegraph, that the future of RAF flying teachers might be in jeopardy? Where will that leave the ATC? The Government have cut costs so much that they have effectively done away with the RAF flying instructors on which the ATC depends.

Mr. Soames: I certainly pay tribute to the air training corps in the hon. Lady's constituency. I am sure that there, as in all hon. Members' constituencies, it does a marvellous job and stands as a beacon in the communities in which it serves. On flying training, the hon. Lady, not for the first time, has got the wrong end of the stick. I can assure her without any diffidence that the air cadets will get all the flying to which they are entitled. Indeed, it is the MoD's aspiration to provide more and not less flying.

Joint and Combined Exercises

Mr. Quentin Davies: To ask the Secretary of State for Defence what joint and combined exercises are planned in the near future. [26929]

Mr. Soames: Exercise Purple Star, the largest joint and combined operation for a number of years, involving about 12,000 UK forces, began at the end of last month and continues until 19 May. The House will be pleased to know that that combined UK-US exercise includes key elements of the planned joint rapid deployment force.

Mr. Davies: I congratulate my hon. Friend on the Government's support for that very important exercise. May I express the hope that the Government will continue to attach a very high priority to the value of exercises in general, and to combined and joint exercises in particular since, as I am sure he would agree, they are essential to the maintenance of our military preparedness and therefore our capability?

Mr. Soames: I am grateful to my hon. Friend for highlighting one of the great difficulties facing modern defence management—the ability to provide the kind of high level, high intensity warfare training, which is so essential to keeping our troops prepared for the extraordinary range of operations that may be required of them. The key elements of the JRDF—the Third Commando Brigade and the Fifth Airborne Brigade—are taking part. It is a major exercise and I assure my hon. Friend that we shall do everything in our power, whether in America, in this country or in the new training areas that are opening up in Hungary and Poland where we hope to have a brigade exercise in September, to ensure that as many of our troops as possible receive the benefit of those very important exercises. We seriously acknowledge the point he makes; it is crucial.

Mr. Cohen: Is it a joint exercise between the hon. Gentleman's Department and the Foreign Office to run

spies in Russia? Are they carrying on at cold war levels and expense? Is it not time to stop such James Bond silliness and apologise to President Yeltsin?

Mr. Soames: Certainly not.

Defence Contracts

Mr. John Greenway: To ask the Secretary of State for Defence how many British jobs are sustained by his Department's contracts; and if he will make a statement. [26930]

Mr. Arbuthnot: The most recent available figures are for 1993–94, when an estimated 395,000 jobs in the UK were sustained by the defence industry, including 315,000 sustained directly by my Department's spending on equipment and non-equipment items.

Mr. Greenway: In an ever-changing and uncertain world, does my hon. Friend agree that a credible defence policy demands a substantial home-based defence industry? Will he assure the House that, after all the upheaval of "Options for Change" and defence cost studies the Government have no intention of seeking further substantial reductions in defence expenditure, which could only have a catastrophic effect on jobs in the defence procurement industry?

Mr. Arbuthnot: A credible defence policy depends on the election of a party which believes in defence, and my hon. Friend has established that our party does. The Labour party, sadly, does not. It has called for reductions in defence spending which would reduce our capability out of all recognition. The Transport and General Workers Union at its conference called for a cut of £18 billion. That would leave the defence of this country in the hands of civilians, because we would not be able to afford any armed forces or any equipment. Either that, or we would be able to afford about half our equipment, but we would not be able to afford the civilians or the armed forces to run it.

Mr. Barry Jones: What is the status of the future large aircraft project? Have the French sorted out their problems? My constituents would like a positive answer.

Mr. Arbuthnot: Once again, I congratulate the hon. Gentleman on his assiduity in working for his constituents. He brought a delegation to see me only two weeks ago. I have spoken to the French about this matter. They have yet to decide their law of programmation. As soon as they do, we shall be clearer about precisely what the French position is. I welcome the fact that the hon. Gentleman brought a delegation to see me about this very matter.

Fisheries Protection Fleet

Mrs. Gorman: To ask the Secretary of State for Defence how many Royal Naval vessels are contracted to MAFF as part of the fisheries protection fleet. [26931]

Mr. Soames: Nine vessels currently comprise the fisheries protection squadron. Four or five are routinely at sea on behalf of MAFF and one for the Scottish Fishery Protection Agency at any one time.

Mrs. Gorman: Will my hon. Friend confirm what his office has told me today—that 17 vessels are contracted


out to MAFF from the defence forces and that they are engaged in policing the quota of fish caught by our fishing vessels, including Mr. Trevor Mole from Essex, who has been fined unreasonably for taking a little more than his quota out of the seas? At the same time, the Spanish, who are busily scooping up our fish, have only nine vessels in action, but as a nation we can do nothing about the situation while we remain within the European Union. Is it not time we gave people a chance to decide whether they want to continue being part of the EU or not?

Mr. Soames: I think that that goes a little wide of the question. I am happy to confirm to my hon. Friend that all the fishing vessels operating in United Kingdom waters are liable to fair and rigorous inspection by the Royal Navy, regardless of their nationality. As my hon. Friend knows, because she has done a great deal of work on the matter, the role of the fisheries protection squadron is to enforce fisheries protection and to ensure that all vessels can go safely about their lawful business. The role of the squadron is one that it discharges with scrupulous fairness. I am sure that my hon. Friend will join me in paying tribute to it for doing what is often a difficult and dangerous job.

Dr. Godman: I sometimes think that the hon. Member for Billericay (Mrs. Gorman) would like to deploy the fleet against the European Union.

Mrs. Gorman: indicated assent.

Dr. Godman: The hon. Lady nods.
The officers and crews of the fisheries protection vessels do a good job in protecting our stocks. Does the Minister agree that they need the most modern ships possible to deal with those guilty of illegal fishing? What vessels does he intend to order to bring the fleet up to date?

Mr. Soames: As the hon. Gentleman is very knowledgeable about the fishing community, I know that he will join me in saying how much the fishermen value the efforts made on their behalf by the Royal Navy. They are truly fortunate to have such excellent protection. As the hon. Gentleman knows and I know, the squadron enjoys the most excellent relations with the fishing industry and fishermen alike. There are currently nine vessels in the squadron. Six are purpose-built Island class offshore patrol vessels, which do the job extremely well, and three are Hunt class mine counter-measures vessels seconded from their parent MCM squadron. We believe that they do the job very well indeed. If there are plans to change the deployment of any of the vessels, we shall, of course, talk to the hon. Gentleman about it. I know of no plans to replace any of them.

Nuclear, Biological and Chemical Threat

Mr. Duncan Smith: To ask the Secretary of State for Defence what assessment he has made of the nuclear, biological and chemical threat to the United Kingdom. [26932]

Mr. Soames: The nuclear, biological and chemical threat to the United Kingdom is assessed at present as extremely low, although we remain anxious for the future.

Mr. Duncan Smith: Does my hon. Friend agree that, in view of all the proliferation that is happening and is

likely to happen, and the evidence of Libya's underground chemical and biological plant, the nature of the developing threat necessitates a powerful deterrent and that a deterrent is no use if the Government who hold it are not prepared to use it?

Mr. Soames: I entirely agree with my hon. Friend. It would be folly to be complacent. We take very seriously the possible threat of nuclear, biological or chemical attack on the United Kingdom. Proliferation of weapons of mass destruction and their means of delivery remain a major source of concern for the United Kingdom and our NATO partners and is, as my hon. Friend rightly said, another essential reason why we need to retain our independent deterrent. I wholeheartedly share his concerns about the construction of the new facility in Libya, which we are monitoring closely with our American friends.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Matthew Banks: To ask the Prime Minister if he will list his official engagements for Tuesday 7 May. [26949]

The Prime Minister (Mr. John Major): This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Banks: My right hon. Friend is well aware of the strong support that I have given to those in Southport who have sought to raise teaching standards in our schools. In the light of today's Ofsted report on reading, will he spare a thought for parents in Islington and Southwark whose children, according to the report, have been failed by weak and mediocre teaching methods? Does he agree that, if we are to improve standards in our schools, improved teaching methods must be the cornerstone of the Government's education policy?

The Prime Minister: I do feel for those parents, which is why my right hon. Friend the Secretary of State for Education and Employment has announced new measures today to root out and shine the light on those bad, Labour-controlled local authorities whose record was shown up so sadly in the report from Ofsted over the weekend. The Labour party's only response to that is to threaten to give more powers to those very same councils to which its Front-Bench spokesmen will not entrust their own children.

Mr. Blair: Can the Prime Minister confirm today's reports that, in the next Conservative manifesto, he will pledge to privatise the Post Office? Is he aware of the enormous concern of many people in rural areas who fear for the future of their post offices and postal services?

The Prime Minister: I fear that the right hon. Gentleman does not seem to understand that many rural post offices—a very important part of local communities—are already in private hands. It is astonishing that he does not seem to know that.

Mr. Blair: It is completely astonishing that the Prime Minister does not understand the concern of those people


that the post offices will be sold off. Will the Prime Minister confirm that, over the next few years, the Treasury intends taking an extra £400 million out of Post Office profits and that that money will simply be another back-door Tory tax? Is that right or not?

The Prime Minister: I can confirm to the right hon. Gentleman that we are looking to make sure that the Post Office gives customers the efficient and effective service that they deserve. I repeat to him, since he clearly still does not understand it, that the rural post offices that he is concerned about are in private hands and that they are efficient and effective. I am astonished that the right hon. Gentleman does not understand that.

Mr. Blair: I have asked the Prime Minister twice whether that will be in the Conservative manifesto. If he is so confident about it, perhaps he can tell us whether it will be. As for a better service, let him tell that to the water customers whose prices have risen by 40 per cent. Perhaps he does not understand that the Conservatives' obsession with privatising our public services is one reason among many others for their humiliation last Thursday. Would it not be better in future if he paid less attention to the factions in his own party and more to the voice of the British people?

The Prime Minister: I was wondering how the right hon. Gentleman would manage to get around to that from privatisation, but I suppose that I should have known from precedent that it does not matter what the first two questions are, the soundbite is always prepared. [Interruption.]

Madam Speaker: Order. We cannot hear hon. Members.

Sir Wyn Roberts: To ask the Prime Minister if he will list his official engagements for Tuesday 7 May. [26950]

The Prime Minister: I refer my right hon. Friend to the answer I gave some moments ago.

Sir Wyn Roberts: Reverting to education, will my right hon. Friend confirm that this Conservative Government will not take away the £560 per annum of child benefit for the over-16s on which so many families rely to get their children through A-levels? Does he agree that the scrapping of child benefit at that level would be devastating for many families and would prevent many youngsters from going on to further education?

The Prime Minister: I can of course confirm that. Since the leader of the Labour party is so interested in what will be in manifestos, perhaps he can confirm that the scrapping of child benefit for youngsters of 16 and 17, as proposed by the shadow Chancellor and objected to by the shadow Foreign Secretary, will be in Labour's manifesto, at a time when child benefit is being supported by Labour's official spokesman on social security. Perhaps he would care to make that clear speedily. On the merits of the case, there is no doubt that that would be a severe disadvantage—[Interruption.] You can tell when the right hon. Gentleman does not want to answer: he chats to his hon. Friends. That policy would be a severe

disadvantage to many families on low incomes who want their children to have a better start in education than they themselves had.

Mr. Ashdown: On the first day of the war crimes tribunal in The Hague, does the Prime Minister recognise that peace in Bosnia is more at risk through the ambitions to create a greater Croatia than through any threat from a greater Serbia? Does he at least recognise that the withdrawal of IFOR without replacement in November would mean that there would be no chance of an unchaperoned peace persisting? Does he recognise that the west must now insist on the inviolability of Bosnia's borders and must halt Croatia's quietly annexing Bosnian territory?

The Prime Minister: The right hon. Gentleman is right to draw attention to the fact that the peace is uneasy across the former Yugoslavia. That is undoubtedly the case. At this stage, it is too early to judge what will be necessary at the time when IFOR withdraws. There is a great deal to be done. Thus far, the military work has been immensely successful. There is quite a lot still to be done on the civilian side. We shall need to make the judgment to which the right hon. Gentleman referred at a later stage.

Mr. Harry Greenway: To ask the Prime Minister if he will list his official engagements for Tuesday 7 May. [26951]

The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.

Mr. Greenway: Does my right hon. Friend share the deep concern of the British people and all of us—[Interruption.] I am quoting the Leader of the Opposition, who loves to talk about the British people. We represent the British people here. [Interruption.] Yes, we do, and we always will and the Opposition had better learn that. Does my right hon. Friend share the deep concern of the British people and myself at Ofsted's report today of appallingly low reading standards in three Labour-controlled local authorities? Does he agree that generations of children have been let down educationally and in other ways by the Labour and Liberal parties while the leader of the Labour party and others in that party have rescued their children into Conservative authorities and selective schools but would deny those opportunities to others? [Interruption.] Yes, they would.

The Prime Minister: I do not blame anyone, whoever he or she may be, for taking advantage of Conservative Government reforms on education or on anything else. It is certainly true that Labour Front-Bench Members know an awful lot about schools in Islington and Southwark—sufficient, certainly, to send their children elsewhere.

Mr. David Marshall: Following last Thursday's election results, has the Prime Minister given any thought to how his premiership is perceived by the great British


population? Does he not realise that, far from giving an Oscar-winning performance, he is regarded politically as a dead man walking?

The Prime Minister: I thank the hon. Gentleman for his support. I can tell him quite sincerely that it is not reciprocated.

Mr. Riddick: To ask the Prime Minister if he will list his official engagements for Tuesday 7 May. [26952]

The Prime Minister: I refer my hon. Friend to the reply I gave some moments ago.

Mr. Riddick: Will my right hon. Friend confirm that the Government will grant export licences for any orders for British beef received from countries outside the European Union? Is it not time for the British Government actively to promote the sale of British beef to countries all over the world, as a clear demonstration to the British public and to British farmers that we will not stand idly by while European farm Ministers destroy this country's beef industry to the benefit of their own?

The Prime Minister: I share the concern and frustration expressed by my hon. Friend. We continue to believe that the ban on British beef products is unjustified and disproportionate. The European Commission President and the Agriculture Commissioner have now accepted that British beef is safe. On that basis, there is no justification for member states retaining the ban. We continue to press the Commission and other member states for a comprehensive framework for the speedy relaxation and complete removal of the ban.

Mr. Faulds: To placate the loony Little Englanders behind him, why does not the Prime Minister—[Interruption.] You will hear me in the end. Why does not the Prime Minister send an expeditionary force under Field Marshal Cash and a gunboat under the lunatically immature Redwood to teach the bloody foreigners a lesson?

The Prime Minister: I think that the hon. Gentleman is well aware of the fact that the view right across my party is that we are better off remaining in the European Union, and I have expressed that view on many occasions. Perhaps the hon. Gentleman is aware of who it was who once said:

Many voters, including myself, are still unconvinced it was a good idea to join the Common Market in the first place.
In case he does not know, it was the shadow Foreign Secretary.

Mr. Sweeney: To ask the Prime Minister if he will list his official engagements for Tuesday 7 May. [26953]

The Prime Minister: I refer my hon. Friend to the reply I gave some moments ago.

Mr. Sweeney: Could my right hon. Friend find time to visit the Vale of Glamorgan in the next few months, where on Thursday there was a local government by-election with a 10 per cent. swing to the Conservatives? Does he agree that that swing shows that the Conservative fight back has started well and truly in the most marginal seats in Britain? Does he agree that the fact that the Labour-controlled Vale of Glamorgan council has just raised council tax by 22 per cent. demonstrates that Labour government, whether locally or nationally, is bad for our pockets?

The Prime Minister: I think that history certainly supports my hon. Friend's claim, and so do current events. The Labour leader and the shadow Transport Secretary both want a higher rate for middle income earners and the deputy leader—alas, missing today—wants a higher top rate of tax. They are in complete turmoil over their plans for child benefit, which amount to an extra 5p on income tax for a family on average earnings. The fact is that raising taxes is the Labour instinct—it is in Labour's blood, and nothing will stop it.

Mr. Wigley: Is the Prime Minister aware of figures published last month which show that, for the first time, gross domestic product per head in the Irish Republic has now passed that of Wales? Does he believe that that is because of the very strong voice that the Irish Republic has in the European Union and the benefits that it receives from that, or is it because of his Government's failure to develop a good spread of well-paid jobs throughout Wales?

The Prime Minister: I suggest that the hon. Gentleman has a look at some of the jobs in Wales which are the result of inward investment and which would not be there but for the Government. As for the GDP figure, the hon. Gentleman might bear in mind the fact that a substantial amount of the Irish Republic's GDP—5 per cent. or 7 per cent.—is a direct subvention from the European Union.

Cattle Disposal Scheme

Mr. Paul Tyler: (by private notice) asked the Minister of Agriculture, Fisheries and Food to make a statement on what progress has been made in giving effect to the 30-month cattle disposal scheme.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Tony Baldry): Slaughtering started in Scotland on Friday and elsewhere in the United Kingdom today. Some 104 livestock markets and some 72 abattoirs have been approved as collection centres. I anticipate substantially increasing activity as the week proceeds and see no reason why the scheme should not be fully operational by the end of this week.
I have made it clear that all operators in the meat business will have to work together to make the 30-month cattle scheme a success. I met representatives of livestock markets and a number of abattoir representatives this morning and I am seeing the renderers tomorrow. They represent the crucial steps in the chain.
Large numbers of animals have to be processed, and I will need to ensure that this is done as speedily as possible so that farmers can have surplus stock removed from their fields and, quite reasonably, be paid compensation as quickly as possible.
We have at all times to have regard to the welfare of the animals involved and the need to restore consumer confidence. The scheme is being put in place as one of a number of measures to restore confidence in British beef. It is a novel scheme without precedent, and we have sought to set it up with all possible speed.
Farmers, livestock markets, abattoirs and renderers have to work together. They do so usually and they have to do so now. Every day I intend to see representatives of all the main interests to deal with any problems that might arise, but I hope that it is not long before the scheme no longer requires daily ministerial involvement.
Farmers will, I am sure, recognise that large numbers of animals have to be culled and that they cannot all be culled immediately. As the House knows, there is finite rendering capacity, so I am examining with all speed whether and what possible further cold store capacity can be brought into play to help accelerate the scheme.
I well appreciate the concern of every hon. Member that the scheme should operate fully and efficiently without delay. I promise to keep hon. Members updated regularly on progress and am determined that the scheme will make a positive contribution to our wider aim of restoring confidence in the British beef as speedily as possible.

Mr. Tyler: I thank the Minister of State for his extensive statement. Does he now accept the assessment of this week's Farmers Weekly that the Government's scheme is still in complete chaos? Does he also accept that the statement made by the Minister last week that this has absolutely nothing to do with the removal of the export ban pins the responsibility here with his Ministry in London? Does he further accept the report of the Environmental Health News that the Meat Hygiene Service does not have enough qualified staff to undertake the cull programme and that the abattoirs have reasonable

cause for concern? How many cattle are in the chain awaiting slaughter as of today? How will the blockage be removed by the steps that the Minister has announced? Is it not clear that a great industry in our rural areas is being held at gunpoint by the dither and delay of his Department?

Mr. Baldry: I am driving the scheme and I accept full responsibility for it. The hon. Gentleman has to accept that this is a novel and fairly complex scheme. It also involves our European Community partners who, in large part, are paying for it. We need to ensure that what happens in the slaughterhouses is properly monitored. We also need to ensure that there is no scintilla of risk that any of this beef ends up in the human food chain, and there are more than enough Meat Hygiene Service staff to ensure that that is done. We need to ensure a proper geographical coverage of collection centres—both slaughterhouses and livestock markets. We also need to ensure that the sectoral interests start to work together, as they do normally, to ensure that the scheme is a success.
The hon. Gentleman is quite right: there is a backlog. I am aware that farmers want the backlog cleared off their fields as speedily as possible—not least, quite reasonably, because they want to receive their compensation cheques. There are approximately 120,000 cattle in the backlog and they need to be processed as speedily as possible. I hope that I have made it clear to hon. Members that I will take all possible measures to ensure that that is done. I hope that everyone who is involved will settle down and co-operate to ensure that the scheme is a success.

Several hon. Members: rose—

Madam Speaker: Order. The House was somewhat noisy when the hon. Gentleman put his original question. Therefore, I draw the attention of all hon. Members to the specific question, which relates to the 30-month cattle disposal scheme. This is not a private notice question that should be used as an opportunity to raise other issues related to BSE. The question is very specific.

Mr. Michael Alison: Is my hon. Friend aware that the 30-month cattle scheme is very welcome—even if, like a heavy aircraft, it is trundling along the runway before becoming fully airborne? Is my hon. Friend conscious of the fact that considerable costs arise for some farmers in getting their cattle to the collecting points? Will those costs be debited from the compensation payable in respect of each cow or will they be borne by the scheme?

Mr. Baldry: Farmers have always met the costs of transporting livestock to livestock markets and of transporting livestock direct to abattoirs when they have chosen to do that. The only issue that arises is whether farmers should bear the cost of transporting livestock from livestock markets to abattoirs if they choose to go through the live weight option. It seems not unreasonable in this scheme that farmers should do so, not least—as I made clear on Friday in a letter that I sent to all hon. Members—because they are being relieved of the obligation to pay the Meat and Livestock Commission levy. I hope that farmers will see this as a fair scheme, under which they are receiving fair compensation. It is not unreasonable for farmers to meet the transport costs.

Dr. Gavin Strang: I remind the Minister that last Thursday the Prime Minister told the


Leader of the Opposition that the confusion surrounding the scheme was being examined and investigated and that he hoped that it would be resolved speedily. Is it not becoming clear that last week's confusion is developing into this week's chaos? It is vital that we eliminate BSE at source. We therefore need to investigate why it is that 67 per cent. of new cases—

Madam Speaker: Order. I have made clear the narrow scope of questions relating to the private notice question, so the hon. Gentleman is fully aware of that. He must relate his question to the 30-month cattle disposal scheme only and not to wider issues. If he has a further question to put on that specific scheme, I will, of course, hear it.

Dr. Strang: I certainly have. If that is your ruling on the private notice question—

Madam Speaker: It is not only my ruling: the question itself demands it.

Dr. Strang: I accept that, but can I put it to you, Madam Speaker—[HON. MEMBERS: "No."] It relates to a different point. Because we may kill hundreds of thousands of cattle under the scheme it is all the more vital that we attach priority to devising a live test to avoid the need for killing in the long term. It would be unforgivable if the Ministry was in any way involved in delaying the establishment of such a live test.
Since it has been decided to have a live weight and a dead weight option for the 30-month rule, Ministers have a responsibility to ensure that compensation is not only fair to farmers but fair to all sections of the livestock industry and the taxpayer. I put it to the Minister that the entire industry wants to tackle the problem but that it is the Government who must give the leadership.

Mr. Baldry: I am disappointed in the hon. Gentleman. I had hoped that rather than using words like "chaos", he too would encourage slaughterhouses, renderers, livestock marts and everyone else in the industrial chain to work together.
The hon. Gentleman has close contacts with the industry and I am sure he is aware of some of the sectoral interests at play. It is important that they all appreciate that it is in their long-term interests to work together because it is in their long-term interest to restore confidence in British beef.
I do not think there has ever been a scintilla of a suggestion that we want anything other than to develop a live test as speedily as possible. For that reason we are helping to fund considerable amounts of research on it. If we can develop a live test, no one would be more delighted than us.
The dead weight option was introduced because, as a common pattern of trading, many farmers do not take their cattle to livestock marts but go straight to the abattoirs. It was the earnest request of members of the National Farmers Union, the Country Landowners Association and others that there should be a dead weight option. We have listened to their requests and, despite stiff opposition from some of our European colleagues, who were suspicious of that option, we have succeeded in introducing it. I would very much hope that hon. Members

would applaud that because it demonstrates that we are seeking to listen to the concerns of those involved and, wherever possible, to respond to them.

Mr. John Greenway: May I report to my hon. Friend that beef farmers in north Yorkshire are finding it extremely difficult to get abattoirs to take cattle? They recognise, however, that my hon. Friend is aware of the urgency of the situation and they welcome his decision to get all parts of the industry together to provide a daily solution to the problem.
Does my hon. Friend agree that it sits ill on Opposition parties to criticise the 30-month slaughter scheme when they called for it, as did farmers, in the first place? Everyone knew that it would be complicated and that it will work only when everyone in the industry works together for the greater good of our beef industry.

Mr. Baldry: My hon. Friend is right. The scheme was introduced with the support of all Conservative Members after the fervent request of retailers, producers and everyone involved in the food chain. They believed that it would prove to be a substantial measure in helping to restore confidence in United Kingdom beef. Everyone must work together to ensure its success.
My hon. Friend takes a close interest in the issue and he will know only too well that one of the difficulties is that this country has a finite amount of rendering capacity, but renderers must be prepared to work with a number of abattoirs. They cannot just believe that they can work with a favoured abattoir or a couple of favoured abattoirs. That would cause considerable resentment in different parts of the country.
I have sought to ensure that the abattoirs involved in the scheme represent a wide geographical cross-section, ensuring that, if need be, farmers can take their livestock to abattoirs in a convenient location. Co-operation is needed between farmers and livestock marts on the one hand and renderers and abattoirs on the other. No Minister of any Government at any time can wet-nurse every slaughterhouse, renderer and livestock mart in the country. They must co-operate and work together to make the scheme a success.

Mr. Tam Dalyell: On the issue of representations by the Highland Cattle Society, is there any special dispensation because highland cattle take longer than 30 months to mature? When the Minister meets the renderers tomorrow, will he ask them about the temperatures of the heating of food in relation to prions, which may be the root cause of the whole problem?

Mr. Baldry: On the hon. Gentleman's first point, he may well be aware that, last Friday, we issued a consultation paper on exemption schemes for breeds of cattle—such as highland and Dexter cattle—that tend to mature after 30 months. I will ensure that a copy is sent direct to the hon. Gentleman.
On the rest of the process, of course we shall ensure that rendering and every other process complies with the objectives of best science. I am sure that the hon. Gentleman and I would agree that it is imperative that we, and everyone in Europe, apply best science to what we


do, because, if we do not work and take our decisions on the basis of best science, we might as well return to the Copernican theory of the universe.

Mr. Patrick Nicholls: I compliment my hon. Friend on the way in which he communicated the details of the scheme today, but does he agree that those animals are being slaughtered—and therefore disposed of—not for any scientific reason, but apparently to restore confidence among the Europeans? Does he therefore agree that any extended scheme that might be introduced to dispose of more animals in the same way could be introduced only on the basis that the ban would be lifted? Such schemes cannot be advanced without a copper-bottomed guarantee to lift the ban that has been wrongly imposed on our products.

Mr. Baldry: My hon. Friend always makes some very good points. In fairness, this scheme was instituted because retailers, the National Farmers Union and everyone in the food chain joined together and made representations to us and expressed the view that implementing the scheme would help restore confidence in the domestic market in British beef and consequently help restore confidence in UK beef elsewhere in the world.
My right hon. and learned Friend the Minister has told the House several times that there is no suggestion of proposing any further selective cull unless it is based on best science and commands the support of the House. As I believe became clear at the last meeting of the Council of Ministers, the European Commission and European Community vets recognise and acknowledge that the scheme that my right hon. and learned Friend proposed is the best that can be devised—in other words, no one yet has been able to suggest a better scheme for a selective cull, although of course we are always prepared to listen to any further suggestions and comments that might be made.

Mrs. Gwyneth Dunwoody: Will the Minister be flexible in his attitude towards the various abattoirs? There is already controversy in south Cheshire about some of the choices. Is he aware that, far from the information system working efficiently, it took me nearly 24 hours on Thursday and Friday to obtain accurate information about the working of the scheme? Will he please ensure that detailed information is easily available to the people affected?

Mr. Baldry: I have sought to ensure that there is a proper coverage of abattoirs throughout the country; there is certainly adequate slaughterhouse capacity in Cheshire. If too many abattoirs are involved in the scheme, there is a danger that we may start to involve abattoirs that have been mothballed or have not had money invested in them to bring them up to EC standards, and we also increase the difficulties of marrying up abattoirs and renderers.
If, as the scheme develops, it appears that we can take on more slaughtering capacity, I am willing to consider doing so, but I am advised by the vets and many others that the current spread of abattoirs is adequate.
On the hon. Lady requiring information, I very much hope that if the hon. Lady or any other hon. Member has a problem or query in relation to the scheme, they will

telephone my private office; that is what private offices are for. Otherwise I very much hope that farmers and producers will telephone the intervention board to receive assistance.
I have written to all farmers setting out the initial details of the scheme, and I am closely monitoring calls to the intervention board. If the same queries are made time and again, I shall send further information to farmers in order to deal with those persistent queries. If hon. Members have a problem or a difficult constituency case, I hope that they will contact my office immediately,

Mr. Andrew Rowe (Mid-Kent): Is my hon. Friend aware that in Maidstone we have probably the most modern, and certainly one of the most accessible, livestock markets in the country? It is outraged that it has been left out of the scheme so far. Can my hon. Friend offer any hope that, as the scheme develops, Maidstone will become a collecting point?

Mr. Baldry: The criteria for including livestock marts was that last year they dealt with either 2,000 cull cows or 2,000 clean beef cows—on average, that is 40 cows per week. If a market does not deal with at least 40 cows per week, one must question whether it is a serious player. I have said that I will re-examine the coverage of both abattoirs and livestock marts. However, I would need to be persuaded to increase the number of livestock marts, given the existing extensive coverage of collection centres.

Mr. Ieuan Wyn Jones (Ynys Môn): The Minister will be aware that there is concern, particularly in areas of large geographical spread such as north and mid-Wales, that his strict criteria for collection points might not always be met. It might be in the interests of the industry if the Minister were to look at specific problems in certain areas.
Abattoirs in north-west and west Wales have difficulty obtaining any support from the rendering industry. The Minister has said that he will talk to the industry immediately in the hope of reaching an agreement. If it does not agree and if no rendering facilities are available, does the Minister accept that it is purely academic to appoint abattoirs in the first place?

Mr. Baldry: Ten abattoirs in Wales are approved under the scheme and they are spread from the north to the south of the Principality. There is a fair coverage of abattoirs in Wales. It is essential that the renderers co-operate with the abattoirs in order to carry out the maximum amount of rendering. Clearly, the process is dependent upon the rendering. If the renderers do not co-operate, they may be assured that I shall be on their backs until they do. Their co-operation is essential. It is their industry as much as anyone else's, and they must have an interest in restoring long-term confidence in United Kingdom beef.
I hope that the renderers will start to co-operate fully with slaughterhouses up and down the country in order to maximise the scheme's throughput as speedily as possible. That is already occurring in Scotland and Northern Ireland. I hope that the renderers and other sectoral interests south of the border and in Wales will see that and follow their example.

Mr. David Harris: I thank my hon. Friend for responding quickly to the representations made by


hon. Members last week in the House and outside it about increasing the number of collection centres at markets. I am grateful that Helston has been included, but I am sorry that Penzance has not been selected so far.
By limiting the number of abattoirs to 44, Her Majesty's Government are concentrating still further the business in the hands of a few large abattoirs around the country. Will my hon. Friend re-examine the situation, as the scheme should not be used to bring about a drastic reorganisation of the slaughtering industry?

Mr. Baldry: I have received representations from those, such as vets, who argue that we should restrict abattoirs to a very small number—perhaps 20 or so—which could then be tied to individual renderers. About 200 abattoirs across the country—many of which had been in mothballs for some time—applied to join the scheme. I am seeking to ensure the maximum throughput under the scheme, having regard to the rendering capacity we have. I believe that we have achieved that, but if it transpires that we can take on further slaughter capacity, of course we shall seek to do so. I am keen that we should clear the backlog and get the maximum amount of beef processed through the scheme, not least because I want to ensure that farmers receive their compensation cheques as speedily as possible.

Mr. Tony Banks: The Minister mentioned animal welfare, which concerns me. Will he take us through the process from farm to furnace that the poor dumb creatures will have to undergo? Will he cut out the euphemisms so that we know exactly what it means? As it is pretty obvious from the past that the owners and controllers of slaughterhouses do not abide by the rules, and as the animals are not bound to the food chain, what checks will he make to ensure the highest possible standard of animal welfare? Will his vets be present and will he allow animal welfare organisations to monitor the process?

Mr. Baldry: The Meat Hygiene Service and the Government veterinary service are present throughout the slaughtering process. It goes without saying that we always want to ensure the best possible animal welfare throughout the transactions. We have to bear that in mind when we are considering how fast the 30-month scheme can work. There is no dissembling on that and, as I have made clear today to the livestock marts and the abattoirs, if at any stage there is any suggestion that livestock markets or abattoirs are failing to comply with all the regulations, they will be suspended from the scheme.
The scheme should work properly and effectively in respect of animal welfare, consumer confidence and ensuring that the rules are complied with in terms of public finance. I do not want to open a Sunday newspaper in a couple of months' time to find allegations of animal abuse or financial abuse. The scintilla of a suggestion that anyone is abusing the scheme will lead to suspension.

Mr. John Whittingdale: Will my hon. Friend give further consideration to the plight of those who were previously involved in head-boning, whose business has been wiped out overnight? Can the scheme provide any help to that part of the industry?

Mr. Baldry: My hon. Friend makes an extremely good point. It is not and never has been possible to give

compensation to everyone who has suffered financially, either directly or indirectly, as a consequence of the announcement by the Spongiform Encephalopathy Advisory Committee. The money that we have paid and are paying to abattoirs, renderers and others has been by way of market support. There is no longer a market to support in head-boning and for that reason that industry has not received and will not receive a penny in compensation. That has been made clear. I hope that others involved in the process, who sometimes feel that they may not be receiving as much money as they would like, will have regard to the fact that many elsewhere in the industry have suffered more dramatically.

Mr. Alan W. Williams: Will the Minister clarify what happens to the cattle after slaughter and explain how the carcases are disposed of? He talks about rendering and incineration, but what does he mean by rendering? We all thought that, once the cattle had been slaughtered, they would then be incinerated.

Mr. Baldry: If any hon. Members do not understand the rendering process and genuinely seek a further understanding of it, of course I shall arrange for them to be given a further detailed briefing and perhaps the opportunity to visit a slaughterhouse. It is important there is a full understanding. Once the animals are rendered, they have to be disposed of and, given the scale of the exercise, we are examining means of ensuring that the carcases are disposed of in an environmentally proper and efficient way. That may well require a number of solutions that we are examining in conjunction with the Environment Agency, the Department of the Environment and others. Hon. Members can rest assured that any disposal will be to the best and highest environmental standards.

Sir Teddy Taylor: Can the Minister estimate the cost to public funds of the scheme, which is based on 120,000 cattle, and of the attached abolition of the Meat and Livestock Commission levy? Once those 120,000 slaughters have been completed, will that mean the possible elimination of BSE?

Mr. Baldry: My hon. Friend can do the calculation himself. I circulated to my hon. Friend and to every other right hon. and hon. Member on Friday the details of the exact compensation being paid. We have not set a fixed time limit for the scheme, which will operate as long as necessary to continue to restore confidence in UK beef. The scheme will certainly have to operate for some considerable time. Market adjustments will be made as the scheme is introduced—not least because many farmers who may have run their clean beef on to more than 30 months will now rear and sell their beef in less than 30 months. Clearly there will now be a premium price for beef of below 30 months.

Mr. Gordon Prentice: The Minister mentioned compensation to farmers. Will the Government compensate slaughterhouses for additional lairage costs, the expense of tending animals overnight and extra slaughtering costs?

Mr. Baldry: I am not sure which details the hon. Gentleman has read. Abattoirs will receive funds for


acting as a collection centre and a payment for each animal that they slaughter, which we will negotiate. Slaughterhouses will receive a perfectly fair payment for the work they do, and the throughput of cull cows will be little different from that previous to the scheme's operation. The only change will be that, instead of slaughtered animals going into the human food chain, they will be disposed of otherwise.
I see no reason for slaughterhouses involved in the scheme to be concerned about the payments made to them. I have received no specific representations from any slaughterhouse that the payments are unfair. Abattoirs recognise that the funds that they are receiving from the public purse are perfectly fair.

Sir Donald Thompson: Does my hon. Friend expect that the 30-month rule will be inviolate? Surely the period will be ratched up to 31, 32 and 33 months, as scientific knowledge moves on.

Mr. Baldry: The 30-month rule was chosen because SEAC thought that the time limit was important, which was why the National Farmers Union, the Food and Drink Federation, the British Retail Consortium and others unanimously recommended to the Government that the 30-month cull scheme would make a substantial contribution to restoring consumer confidence in UK beef here and overseas—and we have implemented one.

Mrs. Ray Michie: The National Farmers Union of Scotland sent me a list of live weight collection centres serving remote locations in Scotland, but it does not include the island of Islay or Campbeltown in my constituency. Will the Minister give serious consideration to including those remote places?

Mr. Baldry: As I made clear to the livestock marts this morning, I do not pretend to have perfect wisdom or to offer perfect coverage. If any right hon. or hon. Member feels that there are particular geographical reasons for including another livestock mart, of course I will consider them. Marts must be able to find adequate and proper slaughtering capacity. I am loth to increase substantially the number of livestock marts because the greater the number involved, the bigger is the danger that the scheme will become complicated in respect of the number of abattoirs. It seems to me, as a general rule, that if a livestock mart was not processing 40 cull cows a week before the scheme's general introduction, it was not a serious player.

Sir Michael Spicer: Why will the European Union's financial contribution to the scheme be set against the general rebate that we receive from the European Union when the two issues are completely separate?

Mr. Baldry: My hon. Friend knows that the rules on European finance apply to this scheme and to every other scheme under which the United Kingdom is a beneficiary of the European Community budget. This scheme is no different from any other under which we receive money from the European Union.

Mr. Nick Ainger: Does the Minister accept that his statement leaves in limbo those farmers

who produce slower maturing cattle? Can the Minister clearly say today that, in principle, those slower maturing breeds will get an extension beyond 30 months and that the consultation is merely about practicalities, not about principle? We do not know how long the consultation period will be, and perhaps the Minister can tell us. Otherwise, those farmers will not know whether to put their beasts into the scheme now or to wait for the final announcement.

Mr. Baldry: Again, I shall ensure that the hon. Gentleman gets a copy of the consultation paper. If his constituents who are concerned read the criteria in the consultation paper, they will get a clear indication. The consultation period is as short as we can humanly make it. It is 14 days, and I hope that the industry will respond during that time and that decisions can be made speedily afterwards. It is important to have a consultation period, not least because we have to persuade our Community partners and others that the exemptions should be allowed and should stick.

Mr. George Foulkes: Does not the Minister realise that the farmers, certainly those to whom I have spoken in my constituency over the weekend, are criticising not the scheme but the failure of the Government to have in place anything to implement that scheme when it was supposed to start? That is typical of the lack of a coherent strategy from or any assessment of the implications by the Government, as we saw when the Secretary of State for Health made the original announcement and as we see in the negotiations in Brussels.
Has the Minister made any assessment of the implications of the scheme that he has announced on the displacement of cattle that might otherwise have been slaughtered in the slaughterhouses? Has he made any general assessment of whether the scheme will ensure that some of the people who have lost their jobs in the past six weeks will return to employment and receive an income, which they have not had for six weeks?

Mr. Baldry: It is self-evident to all of us—every hon. Member who has a farming constituency is in touch with farmers—that farmers are concerned to know when their cattle can be taken and culled, not least—and quite reasonably—because they want their compensation cheques. The farmers, like everyone, have to recognise that there is a backlog of around 150,000 cattle and that not all of those can be culled tomorrow or this coming week. There will have to be some forbearance as renderers, slaughterhouses and livestock marts work together with the farmers to bring forward livestock on an orderly basis.
As the scheme moves forward, clearly the number of cull cows will be the same as always. They will be slaughtered and, instead of entering the human food chain, they will be disposed of otherwise. The amount of clean beef will not be significantly reduced, so the volume of work carried out by the slaughterhouses will not be different from that carried out previously. The work will just be done in different ways. I see no reason why, in some slaughterhouses, there will not be more jobs as a consequence. I suspect that we will also see renderers taking on extra employees. In Scotland, there is only one renderer and I am sure it will take on extra staff to cope with the extra demand from the industry.

Elderly (Long-term Care)

The Secretary of State for Health (Mr. Stephen Dorrell): With permission, Madam Speaker, I should like to make a statement about the consultation document, which I am publishing today, setting out the Government's proposals to improve our arrangements for care in old age.
Older people represent the fastest growing section of the community. The proportion of the population aged 75 and over has risen from 4.7 per cent. 25 years ago to 7.1 per cent. today. The figures for those over 85 are even more dramatic: the proportion has doubled from 0.9 per cent. 25 years ago to 1.8 per cent. of the population today.
It is fashionable to regard those trends as a problem that requires a solution. The Government are more optimistic. We unreservedly welcome the fact that medical and social advance allows us to live longer and fitter lives. It requires a particularly perverse nature to regard the prospect of improved life expectancy and improved quality of life as anything other than good news.
But even good news has to be planned for. As life expectancy increases, it becomes progressively more important to ensure that sufficient provision is made to enable retired people to enjoy a comfortable and fulfilling retirement.
The Government believe that the principal responsibility for making that provision must rest with the individual citizen. That is why we have developed a wide range of incentives to encourage people to save for their needs in later life. New rights and flexibilities have been introduced into pension schemes. Savings products, such as tax-exempt special savings accounts and pensioner income bonds, have been developed or made more attractive to encourage people to save during their working lives and provide for their needs during retirement.
There is, however, one cost that can have a dramatic effect on the finances of elderly people, and for which they have often not made specific provision. It is estimated that roughly one in five people who reach retirement age will eventually need long-term residential care, which can cost up to £20,000 per annum or, in some cases, even more. Costs on that scale cause real concern to elderly people and to their families. Furthermore, that worry is compounded by uncertainty, as no individual can be certain either whether they will need residential care or for how long they will need it. The open-ended nature of the potential commitment is a particular source of concern.
Against that background, the Government believe that it is important to provide a framework of support to allow individual citizens to plan their affairs against a more stable background. That framework must balance two objectives.
First, it must continue to offer targeted support to those elderly people who are not able to meet the full cost of their care for themselves. Secondly, it must recognise the contribution of those who do make provision specifically to meet their own needs and ensure that those people secure proper reward for their thrift and responsibility.
The existing arrangements have made possible an unprecedented improvement in provision for the care of elderly people, but they are widely perceived to impose an unfairly onerous burden on those elderly people who do make a contribution to their own care costs.
The Government are determined to address that concern. Last month we changed the rules of the means test, which is used by local authorities to determine entitlement to assistance with residential care costs. We increased from £3,000 to £10,000 the amount of capital that is fully disregarded, and provided for half a resident's occupational pension to be disregarded when he or she has a spouse at home. But we want to do more. The consultation document that I am publishing today therefore offers three new elements in the framework of support.
My first proposal concerns those still in work. Almost 11 million people of working age are members of occupational pension schemes and about 10 million people belong to personal pension schemes. Funded pension provision in Britain is more advanced than in any other European Union country, and it is the financial strength of the United Kingdom pension sector that provides the best assurance to the working population that their financial needs in retirement will be met. The Government believe that there are some significant ways in which pension schemes can help individual citizens to meet their long-term care needs. The Government are therefore seeking views on the possibility that pension schemes could offer variable pensions that involve a smaller initial payment in return for a larger payment later on. We believe that that change would be of considerable benefit to elderly people using their pension funds to help with the cost of long-term care.
My second proposal involves those who are at the end of their working lives and are planning their financial arrangements during retirement. In making their plans they need to make provision for the possibility that they will need residential care, but they will be anxious to safeguard their savings, and often the value of their family home as well. The Government therefore believe that it makes sense both to the individual and to the taxpayer to offer those people a partnership. To the extent that the retired person insures the risk that they will need long-term care, the taxpayer will give extra protection to the assets of the retired person. The consultation document offers two alternative formulations, both of which would have the effect of protecting the assets of those in residential care by an amount related to the value of the insurance policy that they take out.
My third proposal concerns those who are at the point of entering long-term residential care, or are already receiving it. At that point in their lives, it is either certain or very likely that they will need long-term care, but a substantial question mark remains over how long they will need it for. Again, it makes sense to both the individual and the taxpayer to offer a partnership that protects the assets of retired people by an amount that is related to the value of an annuity that they purchase on entering care. The annuity offers the elderly person certainty by providing a commitment to pay a stated amount for as long as he or she needs to fund his or her own care. The consultation document invites views about the level of asset protection that should be available to holders of that type of immediate-needs annuity.
In considering both insurance and annuity products, the Government think it important for the value of the asset protection available to retired people to be related to the value of the policy that they buy. The consultation document sets out more than one option for establishing the relationship, but it does not suggest that purchase of a policy should exempt a retired person from the means test. The reason for that is important. Total exemption could be linked only to an insurance policy or annuity that passed a minimum threshold of value. The result would be to remove any incentive to provide for themselves from those who were not able to afford total exemption. The Government think it important to provide encouragement to save for old age right across the income scale; we are therefore not attracted to a scheme that we believe would discriminate against less-well-off people.
Expenditure by social services departments on the care of elderly people has been one of the fastest-growing commitments of the taxpayer over the past 17 years. In 1979, the figure stood at approximately £1.5 billion in today's values. Expenditure last year was approximately £3.4 billion, to which must be added £1.5 billion of expenditure by the DSS on residential care for the elderly. That makes a total of £4.9 billion—an average annual increase in real terms of more than 7 per cent. every year for the last 17 years. No one can say that this Government are not committed to providing proper social care for elderly people.
Today's announcements make it clear that that commitment continues. We offer a partnership to elderly people and their families. We shall continue to provide a safety net. In addition, we shall ensure that a proper framework is in place to encourage people to provide for themselves, and protect the interests of those who do. That is the proper basis for a free society, and I commend it to the House.

Ms Harriet Harman: The consultation document claims to be about partnership, but is it not clear from the statement that it is about the individual taking over responsibility? The Secretary of State says that
the principal responsibility for making … provision
for care in old age
must rest with the individual".
He says that the Government's role is now nothing more than "a safety net". That is a betrayal. No one told today's elderly that their care was to be their responsibility. No one told them that the welfare state would be only a safety net for them. They were promised care from the cradle to the grave, and that promise has now been broken.
The consultation paper fails to provide the solution to a problem that the Government have created. Will the Secretary of State admit that the lack of proper provision for long-term care has caused an epidemic of insecurity among old people, and that 40,000 people every year must sell the family home to pay for nursing care? Will the Secretary of State also admit that the problem has not been caused by the growing number of elderly people? That steady increase has been known about for many years. The problem is the Government's failure to make proper plans for the care of the elderly. In fact, far from planning for their care, the Government have cut NHS nursing care for the elderly.
Will the Secretary of State confirm that, since 1988, the number of people aged over 75 has remained steady? Will he also confirm that, over that period, the Government have cut the number of NHS continuing care beds by a third from 51,000 to 34,000? Is that not where the care gap has come from? Elderly people have been asked to pay for that care gap, and today they are being asked to pay more—a minimum of £10,000 a pensioner couple when they retire, according to the Government's figures. Today's announcement will be seen as a new Tory tax—a tax on the elderly and a tax on home owners. The Government are saying to elderly couples, "Pay up £10,000 or more or lose your home if you need long-term nursing care."
The £10,000 plan will not solve the problem. Will the Secretary of State admit that, even in America. where people are used to insuring themselves for health and social care, very few people take out insurance for long-term nursing care because it asks them to pay most when they can least afford it—when they are retiring?
What about those who own their own home but do not have £10,000 to spare? What about people who do not own their own home? Will the Secretary of State confirm that, according to the National Association of Pension Funds Ltd., only a minority of people who have an occupational pension would be able to afford to reduce their annual pension to pay for long-term care? Do we not need to pay much more attention to people who need nursing care but who could, with a little extra help, stay in their own homes? What about people in hospital who need short-term residential nursing care to help them get better, not long-term care for the rest of their lives? The right hon. Gentleman's proposals do not provide answers to those questions.
Does the Secretary of State recognise that the Government's short-term, piecemeal approach, in which the consultation document is another step, will not work? We need a royal commission to involve all those concerned in the broad range of social security and health service issues. What people want is the ability to sit down together as a family and plan. They cannot do that now. They want a choice of options for care in their old age. They do not have that now. Above all, they want security. Thanks to the Government, they certainly do not have that now.
Will the Secretary of State act on the Health Select Committee's call for national eligibility criteria for continuing care to end the current lottery, whereby the care that people receive and the price that they pay depends on where they live? Will he admit that the shortage of convalescent and rehabilitation care means that too many people are denied the chance of independence? The reason why today's announcement fails to address the real issues about reforming long-term care is that it is not a serious attempt to rescue the elderly from fear and insecurity—it is merely the Government's attempt to rescue themselves from electoral defeat.

Mr. Dorrell: This is an extraordinary example—the second in a week—of Labour's Front-Bench team not being able to work out its own line. On the lunchtime television news, an argument was going on between the hon. Lady and her hon. Friend the Member for Islington, South and Finsbury (Mr. Smith). In the House this afternoon, the hon. Lady has again described the proposals as a betrayal. On the lunchtime television news, the hon. Gentleman said:


Well, I have no particular objection to the basic idea.
The hon. Lady said at lunchtime that the proposals were a tax on being old and on being a home owner; the hon. Gentleman had no particular objection to the basic idea.
Opposition Front-Bench spokesmen really should work out their lines before they go public on a television screen or in the House of Commons. When the hon. Gentleman goes to see his hon. Friend the Member for Peckham (Ms Harman), perhaps he will explain to her the difference that she glossed over this afternoon between social care and health care. She led the House to believe that she does not understand that, since 1948, there has been a difference in the funding arrangements for social care, under which support has been means-tested since 1948, and the funding arrangements for health care, which have been a universal, largely free service since 1948. They remain exactly that.
The hon. Member for Peckham talked about the decline in bed space in the national health service. She is right. The House will be interested in the figures. The figures that she quoted are not precisely the ones that I have in front of me, but they are near enough. The number of NHS beds for care of the elderly fell from 55,000 in 1979 to 37,000 in 1995—a reduction of about 18,000. What she did not tell the House was that, in the same period, spaces in residential homes—75 per cent. of which are supported out of public funds—increased from 32,000 to 167,000, or that nursing home spaces increased from fewer than 20,000 to 155,000.
The hon. Lady did not mention the fact that, as I said in my statement, there had been a 7 per cent. per annum real terms growth in public funding for care of the elderly since 1979. It is simply a travesty of the truth to represent that policy as undermining care of the elderly. In the past 17 years there has been an unprecedented growth in the public funds available to support elderly people.
The hon. Member for Peckham went on to peddle the myth—here the hon. Member for Islington, South and Finsbury was just as guilty as she was—that the Government's proposals were linked to a £10,000 charge to elderly people. She might like to turn to example 1 at paragraph 9.22 of the document. I do not ask her to go through all the examples, but simply to look at example 1, which makes it clear that the charge is £5,000 to protect a £60,000 house—£5,000, not £10,000. The more important point is that, as I said clearly in my statement, there is no minimum qualifying amount. Any couples or individuals who have savings or assets that they want to protect can benefit from the scheme. It is simply not true to say that there is a minimum qualifying amount.
Anyone listening to the response of the hon. Member for Peckham would have been hard put to recognise the proposition that in this paper the Government are offering the terms on which the means test will be made more generous to allow more public support to go to those who have provided for themselves in old age. The core idea in the statement is that, in addition to continuing to provide the safety net that has been available and has been developed since 1979, we shall also provide support to those who provide for their own needs. I believe that that is right.
The hon. Member for Peckham concluded with a commitment to a royal commission. It is the saying of a politician who has no ideas. It is one of those great

sayings of history: "The cheque is in the post, leave it to a royal commission." That is the hon. Lady's standard of policy-making.

Several hon. Members: rose—

Madam Speaker: May we now have brief exchanges—brief questions and brief answers? A number of hon. Members want to ask questions.

Mr. Nigel Forman: The three proposals in my right hon. Friend's statement are significant steps forward in a difficult area and I congratulate him on that. In financing them, does he recognise that there is bound to a partnership between the general taxpayer and the families of those who need the care? Will explain a little more fully how that can be carried forward?

Mr. Dorrell: I am grateful for my hon. Friend's welcome for the document, and I agree about the need for partnership. As I have stressed, the key concern must be to continue to provide the safety net for those who cannot provide for themselves while offering a fair arrangement of partnership between public and private sector for those who can and do save for their old age. Those people have been disadvantaged by the system over the past few years and we offer them targeted assistance in the document.

Mr. Archy Kirkwood: It is welcome that the Government have made some proposals because there is much uncertainty and concern about future provision, but I am nervous about the timetable because important work, such as the Select Committee's report and some valuable work by the Rowntree Foundation, will become available in the next few months. The consultation period is only four or five weeks, which is too short. I am concerned about the amount of money involved and whether the scheme will effectively be available to people on ordinary incomes. Example 1 on page 35, to which the right hon. Gentleman referred a moment ago, talks about insurance that would pay out £7,500 a year. What premium would have to be paid to get such a return?

Mr. Dorrell: The example in paragraph 9.21 that I cited would involve a cost of £7,500 to provide cover for the rest of the life of the individual. If that person wanted only to protect a £60,000 house—the detail is set out in paragraph 9.22—the single premium would be £5,000. However, the important point is that people who want to protect smaller sums, either because—as the hon. Member for Peckham rightly said—they are not home owners and want to protect a cash nest-egg or because their houses are not worth £60,000, have that option under the proposals. There is no minimum qualifying amount and nor should there be, because it is my purpose to encourage all sections of the community to save to provide something to help them in their old age and to give people a reward when they do so.

Mr. Warren Hawksley: I congratulate my right hon. Friend on his consultation document—it is a move in the right direction and it is right that the problems of financing care should be tackled. I have two points. First, will he develop the further stages of the process and the timing of that?
Secondly, I hope that he will be able to give my constituents an assurance that they will have a choice between council and private facilities in spending the money. Dudley's Labour council claims to be under financial restrictions under care in the community and blames the Government. It has decided to fill its own homes rather than to give the private sector a chance to provide the service. Private homes are often better and cheaper for the taxpayer. Will he assure us that it is a bad use of taxpayers' money to spend more for worse homes, and will he say what he is going to do about it?

Mr. Dorrell: My hon. Friend's second point is important and runs much wider than this issue. It is important to encourage social service departments that are responsible for making decisions about where people go into care to consider honestly the costs and benefits of particular forms of care and not to bias their decisions in favour of their own protected public authority sector. I agree about that, and I give him a complete assurance that, because the money paid out of the insurance and annuity schemes will be the insured person's money, people will be free to use those resources in the home of their choice.
On my hon. Friend's first question about the timetable, the document makes it clear that we intend to make it possible for people to take advantage of the schemes during 1997. As primary legislation is required, he can draw his own conclusions from that commitment.

Mr. Frank Field: As the introduction of a new national insurance care pension would have rewarded everyone who works hard and saves, will the Secretary of State say what consideration he gave to that proposal, as opposed to the partial proposals that he has talked about today?

Mr. Dorrell: I prefer to encourage voluntary contributions—encouraging people to recognise their responsibilities without the use of compulsion, which makes the contributions largely indistinguishable from a form of taxation. I prefer the voluntary approach, and the document makes it abundantly clear that that is the Government's policy. We considered both approaches and opted, as a matter of conscious choice, for the voluntary one.

Mrs. Jacqui Lait: Does my right hon. Friend accept that many of my constituents will welcome the proposals, particularly his assurance that they will be introduced during 1997? Does he also accept that a number of them will not be able to avail themselves of the proposals and will therefore suffer the problems with social services that have been described? When does he expect to break the hegemony of social services by breaking up their role as judge, jury, prosecutor and inspector?

Mr. Dorrell: My hon. Friend may be interested to know that I announced 10 days ago a series of reviews into the value for money being secured by social service departments. The social service sector is the fourth and often not commented on arm of the welfare state. It is responsible for substantial public expenditure and it is

right that the manner and value of that decision-making process should be subject to proper public audit. I announced a series of proposals to secure that in a speech to the Association of Directors of Social Services roughly 10 days ago.

Mr. Alfred Morris: What can the proposals do for the more than 40,000 elderly people who have had their homes sold over the heads, in the last year alone, to pay for long-term care? What will they do for their caring relatives, mainly women, again in their tens of thousands, who, after many years of caring for an elderly parent, now find that they have lost their inheritance? Does the Secretary of State recall that it was the plight of caring relatives and their deep sense of injustice that brought this issue to the boil, not only across middle England but all across this country?

Mr. Dorrell: I share the right hon. Gentleman's impatience to get these proposals in place so that we can prevent that process from continuing. I simply invite him to address his comments to Labour Front Benchers, who are prepared to appoint a royal commission to examine the subject further before they will tell us what they would do about it.

Mr. Douglas French: I congratulate my right hon. Friend on these creative and positive proposals. They will be a great comfort to the elderly and are not at all as the Opposition spokesman, the hon. Member for Peckham (Ms Harman), portrayed them. Does he recognise, however, that insurance companies will need to respond positively and helpfully, which I am sure they stand ready to do, to introduce new products and compliance procedures and to ensure that their product design is correct and produces for purchasers what they believe they will get? Will he give as much attention as possible to the consultation process and consider the publication of draft clauses before the legislation comes before the House to ensure that all the details are properly ironed out?

Mr. Dorrell: I can certainly give my hon. Friend the absolute assurance that we shall work closely with the industry and other interested parties to ensure that the issues are fully thought through and ironed out before the legislation is introduced. I will think about my hon. Friend's suggestion on draft clauses. We have already had informal contact with the industry, and we shall continue that with it and other interested parties. I am grateful to my hon. Friend for his welcome and entirely agree with the stress that he places on the need to ensure that we proceed in a proper and open consultative way.

Mr. Dennis Skinner: Is not the truth that what the Secretary of State is up to is a big confidence trick on the elderly? On the one hand is someone with emphysema, who is riddled with disease and has to go to hospital incessantly for perhaps five or 10 years in the latter period of his life and, on the other, those with Alzheimer's disease who see their homes being taken away from them. Under this scheme, all those people who are affected will not get a penny piece. As for this insurance scam, the only people who will make big profits are the friends of the Tory party among the insurance companies. One thing is certain and I do not know


whether the right hon. Gentleman has ever thought about this, but people ought to understand it—do not buy your council house under the Tories, or you might lose it.

Mr. Dorrell: That was yet another example of the catholic views of the modern Labour party. While Labour Front Benchers are busy trying to reassure those who operate in the market that they understand how the market works and that they benefit from the free-enterprise system, the hon. Gentleman remains the authentic voice of the traditional Labour party—which, whenever a public-private partnership is proposed, can think only of the profits of the private partner. The vast majority of elderly people will feel that, at last, there is a clear route forward. They will draw a sharp contrast between that clear route forward and the fog on offer from the hon. Gentleman and from his hon. Friend—if he is happy to call her that—the Member for Peckham.

Mr. David Martin: I welcome my right hon. Friend's imaginative proposals, in particular his highlighting of the contribution made by private rest and nursing homes to the long-term care of the elderly in Portsmouth and elsewhere—the same nursing homes against which the Labour party continues to have a vendetta. Will he, please, state specifically that he intends that there should be legislation in this year's Queen's Speech so that the proposals produced at the end of the consultation period can be put into legislation as soon as possible?

Mr. Dorrell: There are niceties to the specific commitment in the terms that my hon. Friend asks for, but I have given the clear commitment to introduce legislation during 1997. I invite him to draw the same conclusions about the implications of that commitment as I asked my hon. Friend the Member for Halesowen and Stourbridge (Mr. Hawksley) to draw a moment or two ago.

Dr. Lynne Jones: The distinction between social and health care is entirely artificial for my constituents, who are having to sell their homes to pay for long-term nursing care. It has, sadly, become the accepted wisdom that the taxpayer can no longer afford the welfare state from cradle to grave, yet as citizens we are told that we can afford premiums of up to £10,000, or—according to Private Patients' Plan, which has operated the blueprint for this consultation—monthly premiums of £70. In the wings, of course, we have the insurance companies, waiting to cream the profits. This week in The Independent on Sunday, insurance companies told us that they pay out only 70p for every pound that they collect.
Why does not the Secretary of State offer the people of this country the choice that a majority of them want: to pay for their health care through national insurance or the tax system? In the end, the premiums will be a damn sight cheaper than the costs listed in these booklets or in his consultation document.

Mr. Dorrell: The hon. Lady and her colleagues on the Labour Front Bench have to come clean. If they are in favour of universal provision of social care, they should say that that is their policy—it is the policy of the hon. Member for Bolsover (Mr. Skinner)—which will cost an

extra £4 billion of public expenditure. Is that their policy? If it is not, they must not mislead the public that that is the direction in which they are going.

Mr. John Butcher: I congratulate my right hon. Friend. May I warn him—perhaps he does not need any warning—that he is dealing here with a very emotional issue, which, if misrepresented or distorted, could cause a great deal of distress? Will he therefore spend a great deal of time on television and radio over the next three to four hours? If the hon. Member for Peckham (Ms Harman) runs true to form, she will spend that time frightening the daylights out of elderly people.
I also tell my right hon. Friend that, in addition to the hon. Member for Birkenhead (Mr. Field), many of us are curious about the cost-effectiveness and quality of life implications of offering incentives, either through the taxation system or through cash, to relatives who wish to care for their elderly relatives up until the very last moment—the point at which 100 per cent. nursing care is required. That may save money and help the elderly to stay in their homes for longer.
Has my right hon. Friend seen the very interesting and somewhat destabilising research that shows that nicotine, as a drug, can prevent the onset of senile dementia? Does that not raise some rather interesting ethical and life style questions for the elderly?

Mr. Dorrell: I am not proposing to offer any scientific advice on any subject today. The advice is clear: smoking is bad for health. That advice appears in different forms on every cigarette packet. The hon. Member for Peckham can relax about that. I shall be interested to examine evidence that my hon. Friend may wish to send, but, for the moment, scientists' advice is very clear about the health effects of smoking.
My hon. Friend is absolutely right to say that, if the hon. Member for Peckham runs true to form, she will be looking for means of scaring people. She thinks that she has already found that means because she has latched on to the idea that this is a £10,000 bill, but the proposals make it explicitly clear that there is no minimum amount and that any family with any amount of savings that they wish to protect can benefit from the provisions of this scheme. She will be misleading the public if she continues to return to that figure.

Mr. Dafydd Wigley: Does the Minister realise that a large proportion of the widows in my constituency do not have £5,000 with which to buy an annuity? Will he clarify one point that has not been touched on—the position of those who are under 65 but who have been hit by strokes or by other disabling conditions? Are they brought into the provisions or not? There does not appear to be very much reference to them.

Mr. Dorrell: The answer to the hon. Gentleman's second question is yes, there is no age-qualification bar to the proposals.
On his first point, he is precisely right. That is why I have set my face against proposals that offer partnership only to those who can afford to buy total exemption. I am determined that that product should be available to all


people with savings that they want to protect, however small. Any attempt by any politician to mislead the public about that matter is blatantly dishonest.

Mr. Nigel Spearing: Does the Secretary of State for Health agree that health care for the frail aged, whether in home or at home, is but a section of the much broader post-war solution that we thought we had for social security as a whole? Does he agree that his Government cannot deliver that security when their policies are, unfortunately, delivering greater insecurity of employment, greater insecurity of income and even greater insecurities for existing homes for the frail and elderly, such as the Sally Sherman home in Newham? How can we place confidence in a scheme for old age that increases the participation of the City and the use of premiums when, in fact, the Government cannot deliver security now?

Mr. Dorrell: The hon. Gentleman has asked a very wide-ranging question. I pause simply to observe that security of employment and job prospects are better here than they are in any other major European Union country, because our economy is working more efficiently than most comparators elsewhere in Europe. As for his point about the welfare state and its structure, he must recognise that there is a difference between health and education—the two elements of the post-war welfare state—which are provided on a universal basis to a high standard and are largely free to those who need them. That is the commitment that this Government honour on health and education.
In the rest of the welfare state—through social security, social services and housing—ever since the war the commitment has been different. The commitment has been to a safety net to ensure that no one has an unacceptably low standard, but to encourage the individual to improve on that minimum. That is the basis of the post-war welfare state, which is respected by these proposals but which is called into question by some of the questions from Opposition Members.

Mr. Jeff Rooker: There is a well-known reluctance among people to plan for strokes, for the onset of Parkinson's disease or for other such

illnesses. We will all get old, but most people do not expect those illnesses to happen to them. Ordinary, normal, rational and logical people sometimes refuse even to make a will for that reason, later landing their loved ones with horrendous problems. It is a major difficulty.
I ask the Secretary of State to consider how the House legislated in the past to force on people one of two pensions—the state earnings-related pension scheme or an occupational pension—on top of the state pension, because people are reluctant to plan and save for a pension. The House had to do that, with a degree of consensus, because it was the only way in which we could ensure that people avoided dropping through the safety net. There should be an element of that in this scheme, because some people will refuse to take up such a scheme on the basis that it will never happen to them—or they refuse to think about it at all.
Does the Secretary of State maintain that there was a golden age of NHS long-term care? There was not. There were long-stay geriatric wards—with 20 to 30 beds in a ward—where families, if they could, dumped their elderly relatives so that they could get their hands on their relative's house. The quality of care for our constituents' parents was abysmal. Now, the majority of people can, if they wish, stay in small wards, and the majority stay in single rooms. The quality of care is now vastly superior to what it was. I do not make a distinction between the public and private sector when I say that, but we must not lead people to believe that there was a golden age of long-term NHS care as opposed to other forms of care—that would be to set out a false prospectus.

Mr. Dorrell: The hon. Gentleman is powerfully right, and I refer his colleagues to his final remark. I should like to add one further element to what he said about the supposed golden age on which people look back. In addition to the people who received poor care in NHS geriatric hospitals, many tens of thousands could not find care either in such hospitals or in part III accommodation run by local authorities. That waiting list has been abolished by the changes introduced over the past 17 years.

Several hon. Members: rose—

Madam Speaker: Order. We must now move on; I am sure that we shall return to this matter.

Representation of the People (Amendment)

Mr. Spencer Batiste: I beg to move,
That leave be given to bring in a Bill to fix the maximum number of Members of the House of Commons at five hundred.
For years, we politicians have been exhorting British industry to increase its productivity, which it has done with spectacular success. We are reducing the size of the civil service to cut the cost of the state to the taxpayer; we have cut whole tiers from local government and the national health service; and we are pressing councils and schools to make themselves more cost-effective. We were absolutely right in all that, but there comes a time when we also have to lead by example.
We all know that there are far more Members of Parliament than is necessary or desirable and, as a consequence, there are more Ministers, more parliamentary private secretaries and more Opposition Front Benchers than we really need. We should have the courage of our convictions and commit ourselves to a substantial reduction in our own numbers.
Before the war, membership of the House was stable at 615, but since 1950 there has been a slow but inexorable rise in the number of Members of Parliament, from 625 to 630 to 635 to the current 651. Indeed, as a result of the current boundary review, our numbers after the next general election will be swelled by a further eight Members, making a total of 659. Rules 5 and 6 of the Boundary Commission permit such increases for geographical or demographic reasons and, by their very nature, encourage continued expansion. We have accepted this conventional wisdom without asking whether it is necessary or whether there are better alternatives. As a consequence, an already oversized House of Commons is growing without contemporary strategic judgment ever further beyond its already overstretched capacity.
Of course, new buildings can be provided for Members of Parliament and their staffs, although being in Westminster they are inevitably very expensive. However, if we reduce the number of Members of Parliament to 500, as I propose, we shall not need new buildings—indeed, we could probably sell some, as well as saving the cost of 159 Members, their staffs and their support infrastructure. That could mean the saving of millions of pounds in revenue and capital. A substantial saving could be made to the public purse, with an increase in the resources available to support the remaining Members of Parliament in the better performance of their jobs. That is what productivity and value for money are all about. We at Westminster should be no more immune to that process than industry, the civil service or local government.
Some journalists and Opposition Members clearly find my proposal strange. With a cynicism that is, sadly, as familiar as it is misplaced, they argue that turkeys would not vote for Christmas. Certainly, when I proposed a similar Bill last year, the Labour party spoke against it and defeated it. This year, we shall see.
In a recent Harris poll, 60 per cent. of those Members of Parliament who were asked said that they considered 659 to be too many, and a reduction to between 450 and 550 was the most popular solution. In a debate last summer on the Boundary Commission, Members from all

parties called for a reduction in the number of Members of Parliament. The former Speaker, now Lord Weatherill, has argued in the media for large reductions, and the Father of the House, my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) is, as ever, more radical than most and suggested only a few weeks ago that the number should be halved.
Such support for change is not surprising when we consider the overwhelming evidence in favour of it. Let us compare the House of Commons with comparable overseas legislatures. The United States, with a population five times our own, manages with 100 Senators and 435 members of the House of Representatives. Japan, with more than twice our population, has only 511 Members of Parliament. In Europe, only Germany has more Members of Parliament than we have—and then only three more—although its population is 23 million greater than ours. France, whose population is nearly identical to ours, has 82 fewer Members of Parliament. Surely we can manage with fewer than 659—there is no magic in that number.
What would be the advantages of reducing our numbers? The first and most apparent advantage is that we would send a signal to people across the country that we are committed to productivity and an example of how to achieve it. The second is that we can save money for the taxpayer. The amount saved may not be enormous, but its impact on public attitudes would be.
The third advantage is that there would be more space for Members of Parliament to do their job, by which I mean not only physical space in the House but the opportunity to participate more in prime time parliamentary proceedings. How often do we try to speak in a debate or ask a question that we believe is of great importance to our constituents but are not called? Indeed, how many Members now in the Chamber tried unsuccessfully to ask a question on the statement a few moments ago? If there were fewer Members of Parliament, we would have a greater opportunity to represent our constituents in that way.
The fourth advantage is that, even after making savings in public expenditure, there would still be enough money to provide more resources for the support of Members in their constituencies and at Westminster and to develop our information technology systems more rapidly.
Last, but by no means least, the electorate might be a little less cynical about our pay if we accepted for ourselves the redundancies that elsewhere have underpinned non-inflationary pay increases.
Some Members may feel that their work load is heavy enough, with an average of just over 69,000 constituents. Adding the demands of 19,000 voters may seem excessive but, with extra staff, an average constituency of nearly 88,000 can be as well and possibly better serviced. After all, 19 of our colleagues already have constituencies that are larger than that and have coped even without extra staff. My hon. Friend the Member for Isle of Wight (Mr. Field) has 101,391 constituents and wants to keep them all.
Another important by-product and beneficial consequence of the Bill is that it would address and correct an unfair imbalance in the size of constituencies across the United Kingdom. I have raised this matter in the House before. It cannot be right that the average constituency in England contains 69,534 electors, while


the average constituency in Scotland has only 54,571. That situation has arisen because of the House of Commons (Redistribution of Seats) Act 1958 which, for no obvious reason, provided a minimum number of seats for Scotland and Wales, irrespective of subsequent population changes. That democratic deficit means that Glasgow has 11 Members of Parliament while Leeds only eight even though Leeds has a larger electorate.
The simple solution is to return to the pre-1958 position of a common electoral quota for the whole of the United Kingdom. Combined with that, the reduction to 500 Members of Parliament would produce an average constituency with an electoral quota of 87,792 voters which, I believe, is perfectly viable. Leeds and Glasgow would then have six Members of Parliament each, which would be fair. The existing rules on community of interest in setting precise boundaries should be retained in full, and I propose to allow extra flexibility to assist that. I believe that an allowance of plus or minus 10 per cent. of the electoral quota will be more than adequate.
I accept that there may be a need for some exceptions. I recognise that in some sparsely populated areas of the country there would be enormous physical constituencies if they had to accommodate the full quota of constituents. There are also areas with large and cohesive communities that are not big enough for two constituencies and do not want to be split—for example, the Isle of Wight. In exceptional circumstances, I would allow the Boundary Commission discretion to create up to 10 constituencies outside the permitted range.
Clearly, my Bill will have a powerful impact on hon. Members—I am, after all, proposing a reduction of almost 30 per cent. in the number of Members of Parliament. Even after allowing for the normal retirements at elections, there will inevitably be redundancies. I believe that this change is vital for the health of the mother of Parliaments, for our country and for the restoration of public confidence in our national institutions. There is a need for constitutional reform and it should start in the House of Commons. I commend my Bill to the House.

5 pm

Mr. John Butcher: I oppose the Bill of my hon. Friend the Member for Elmet (Mr. Batiste) on the grounds that it does not go far enough. I believe that Members of Parliament should have wider responsibilities, but that we should be less productive of clutter. I declare some form of interest in that 18 months ago I signalled that I will be retiring from the House. Therefore, any comments that I make in relation to the number of Members of Parliament or their salaries will be of a somewhat more distant nature than they might have been. I would, however, be a recipient of the side benefits in the form of an increased pension.
Having cleared that issue with hon. Members, I argue—as animal rights activists sometimes do—that when free-roaming mammals are crowded together in artificial and crowded circumstances it often produces some pretty unhealthy by-products. It is my judgment that the House is getting more and more fevered and therefore demands a culling programme.
I believe that it would be appropriate for there to be 300 Members of Parliament. This raises serious questions. There is an intimate relationship—indeed, a unique

relationship—between a Member of Parliament and his constituents, and it is beneficial to the workings of the House. I believe that Members of Parliament could represent 140,000 voters—which would mean approximately 180,000 souls. Members of Parliament would need to spend far more time in their constituencies in surgery work, but they now have the back-up to do so.
As things stand, we are productive of clutter in the House and we tend to generate ephemera far more than we should. One has only to look at the Order Paper to see the immense cost of the wide variety of hobby horses being ridden by hon. Members. I oppose the Bill because I want to increase the status of Members of Parliament. It is our job to represent our constituencies in Westminster, just as much as it is to represent Westminster in our constituencies. However, we should focus on the broader issues where possible—the issues that affect millions of people when it comes to policy formulation and criticism.
Larger constituencies would mean more balanced constituencies—they would probably have a wider cross-section of income and socio-economic groups. In my view, Members of Parliament would regain some of the status that we appear to have lost over recent years. I hope that my hon. Friend does not mind my opposing his Bill—on grounds that I hope he finds more positive than negative.
Question put, pursuant to Standing Order No. 19 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business), and negatived.

Mr. Batiste: On a point of order, Madam Deputy Speaker. I sought to persuade the House of the need for a Division on my Bill. I believe that I shouted "Aye" to the limit of my voice.

Madam Deputy Speaker (Dame Janet Fookes): The Chair has to make a judgment as to the overwhelming preponderance of the view of the House. There was no need for a Division.

Mr. Paul Flynn: On a point of order, Madam Deputy Speaker. The Register of Members' Interests has been published today. I have perused it and noted that many hon. Members have registered remunerated interests without providing the detail of how much money they are being paid. Does this not frustrate the decision of the House that any such payments made shall be detailed in the Register?

Madam Deputy Speaker: Any views on the matter must be referred directly to the Commissioner.

Mr. Nigel Waterson: On a point of order, Madam Deputy Speaker. I understand that the hon. Member for Leicester, East (Mr. Vaz) is to wind up the debate on the Housing Grants, Construction and Regeneration Bill for the Opposition. I see that in the Register of Members' Interests, which was published today, the hon. Member has—quite properly—declared a fee received from chartered surveyors and a research assistant provided by the Building Employers Confederation. May we have your guidance, Madam Deputy Speaker, as to the hon. Member's participation in the debate after making those declarations of interest?

Madam Deputy Speaker: It is quite improper for the Chair to anticipate in that way.

Orders of the Day — Housing Grants, Construction and Regeneration Bill [Lords]

Order for Second Reading read.

The Minister for Construction, Planning and Energy Efficiency (Mr. Robert B. Jones): I beg to move, That the Bill be now read a Second time.
The Bill underlines the Government's commitment to the construction industry, and I hope that it will be widely welcomed. For the assistance of hon. Members, I shall list the main purposes of the Bill. First, the Bill reinforces the moves of the construction industry to make itself more competitive in an increasingly international market and to deal with abuses of payment procedure. Secondly, it gives more flexibility to local authorities in the payment of grants for private sector renewal.
Thirdly, the Bill reforms the Architects Registration Council to ensure a greater degree of independence and more manageable arrangements. Fourthly, it builds on the success of the single regeneration budget and it brings together the grant-making powers for the budget. Finally, it introduces more flexibility into the home energy efficiency scheme to recognise the pace of technological change in the insulation industry. There are, of course, many other provisions.
The Bill has been considered in another place and it comes to the House much improved as a result of their Lordships' deliberations.

Mr. Andrew Rowe (Mid-Kent): Am I mistaken in believing that the Bill says nothing about extending the building regulations to ensure that, from the beginning, the houses that are built are capable of housing people from every generation and people with varying degrees of disability? If so, is there scope to introduce such a measure into the Bill?

Mr. Jones: My hon. Friend is correct: that is not covered by the Bill. However, it has been raised in debates in the other place, and I assume that that is why he intervened. We have had an enormous response to our consultation about part M of the building regulations, which we are now digesting and analysing. We hope to produce revised part M regulations in due course.
I shall refer to the proposals in the Bill that affect the construction industry. The Bill is a little unusual in that this provision has been introduced in support of initiatives within the construction industry, as opposed to a specific follow-through of the Government's policy. Therefore, it has been a somewhat complex matter because we have had to negotiate with a large number of trade federations and interest groups to produce what I hope hon. Members will regard as a consensus within the industry. As such, the legislation is only the tip of the iceberg and much else is needed in the construction industry. I shall report on any progress in this regard to the House.
I pay tribute to the officials in my Department who have carried much of the load of the lengthy meetings that have taken place with the various interest groups in the construction industry. Although there is a consensus,

it has moved around a little during the course of the deliberations and it has thrown up an enormous amount of extra work.
Something must be done about the competitiveness of the construction industry, which is a problem. In a report commissioned jointly by the Government and the construction industry, Sir Michael Latham, a former Member of the House, reported in 1994 that the productivity of construction in the UK was falling badly behind our overseas competitors. He found that costs were far too high and invited the industry to set itself a target of reducing those costs by 30 per cent. by 2000.
Sir Michael's conclusion may have given many in the industry a jolt, but it was partly based around frightening evidence from the industry's clients. For example, Lynton plc found that the cost of producing a typical American office building in North Carolina to be 32 per cent. lower than a similar building in Heathrow. Stanhope reported that during the period 1985 to 1991 it regularly achieved construction savings of around 30 per cent. compared with industry norms. Anyone who has heard Sir John Egan of the British Airports Authority making speeches on that subject will know that he regards the 30 per cent. target as modest. He has reported that, in most cases, things are 55 per cent. cheaper in the United States.
The Latham report gave no illusions that the solution would be simple. McDonald's Restaurants Ltd. provided at least one example of a cost-saving strategy that was multi-faceted. The company had reduced the cost and time of construction in the UK over the preceding five years by 60 per cent. and on-site construction times from 115 to 15 days by using modular techniques and treating production as an engineering exercise. It was looking for further improvements including standardisation of components, and it agreed on a yearly programme with producers to build up familiarity, team work and performance.
Given that background and the improvements registered by some clients, the House may wonder what legislation has to offer. It is not a process in which legislation offers everything. We cannot require the industry to innovate and use new technologies, although the Government can and do provide assistance to research; nor can we require the industry to use new forms of working such as partnering and benchmarking, although we are sponsoring initiatives aimed at just that as part of our wider competitiveness agenda. We have an obvious interest, and not just because of our commitment to the United Kingdom plc, as the industry's biggest customer. We have therefore been involved in much of the process to improve competitiveness and I would like to report on progress.
One of the first recommendations of the Latham review to be implemented, and one of the most important, is the setting up of the Construction Industry Board. It is comprised of representatives of the four main umbrella organisations in the construction industry representing the consultants and professionals, such as architects; the major contractors and master builders; the specialist subcontractors; and the material producers and suppliers. They have been joined on the CIB by representatives of the clients and of Government. It is the first time that the industry has had an effective co-ordinating body and the ability to speak with one voice.
The CIB mechanism has spawned a number of working groups that have been created to deal with an aspect of improving the construction industry's productivity and competitiveness. Nevertheless, the Government have been persuaded by the construction industry that legislation is required to improve the contractual framework in which it operates. Construction is unusual in the way in which it is organised, because large projects in particular draw upon a wide range of construction skills that tend to be provide by independent specialists. Hence a client may retain a major contractor to organise a project for him, but that contractor will not necessarily use his own staff. Skills and labour may be bought in from subcontractors, each operating under a separate contract. On a large project, the final result will be a lattice of certainly tens, and possibly hundreds of contracts involving the clients, main contractors, designers, managers and specialist subcontractors.
I will come on, in a moment, to the way in which this Bill will tackle the problems that that can cause, but it is important that I first set the provisions in context. They complement a far wider process of productivity improvement. A process that is being co-ordinated by a central forum, the Construction Industry Board.
The board's main avenue of progress is via the 12 working groups. Those have a mixed membership that includes representation from the main contractors, specialist contractors, consultants and Government. In addition, there is representation from that important group—the clients. That wide cross-representation will help to ensure that the outputs from the working groups, whether they are reports, guidance notes, or codes of practice, will have the support of all sections of the industry as well as its clients.
I believe that it is true to say that the extent of that co-operation is unique in the history of the UK construction industry, and it is vital to ensure that the best possible use is made of that valuable resource.
Each of the working groups is making an important contribution to the process of change. I regret that I can only sketch out that contribution in the time available to me.
Working Group one has been producing a guide for clients on better briefing. It has reviewed the guidance already available, and used that to draw up a guide for the use of experienced and inexperienced clients, in the public and private sectors. Many of the problems encountered on construction sites can be laid at the door of inadequate or poor briefing by clients of their designers and constructors. The objective of the guide is to save clients time, trouble and money by helping them to determine the most appropriate construction project for their needs, and at the same time to foresee problems and avoid them. The guide is now in the final stages of preparation and is due to be considered by the board in the near future.
Working group two is producing a code of practice which is intended to cover the full procurement process. The objective is to enable clients to obtain their desired end product, get value for money, and guide industry practitioners on their roles. The code is intended to be an authoritative statement of best practice, and easily accessible to a wide range of clients and industry

practitioners. The work is being co-ordinated with that of working group one. The code is now in its final stages and is due to be considered by the board shortly.
Working group three is also working on a code of practice, which aims to codify the practice of short tender lists and selection on the basis of both quality and price, and ensure that subcontracts meet the Latham principles. It aims to rule out Dutch auctioning, as well as securing co-operative working between subcontractors. The work is being co-ordinated with that of working group two. The final report is due in the near future.
Working group four has a dual task. As well as producing a mechanism to enable quality as well as price to be assessed when engaging professional consultants, it has been studying the issues relating to the creation of a single register of consultants seeking public sector work, and the appropriate requirements for entry on to the register. In tackling the first part of its work, the working group took full account of the various mechanisms that have already been produced in that respect. The guidance will enable full scope to be given to the qualitative aspects of consultants' tenders for commissions, thus enabling proper judgment to be given to value for money. The guidance has been endorsed by the National Audit Office as well as by the Audit Commission and the Chartered Institute of Public Finance and Accountancy. It has now been approved by the board and is due to be published shortly.
On the second part of its remit, the working group's report has been accepted by the board, and handed over to the Department of the Environment, which has let a contract for the redevelopment of that and the contractors management information system.
Working group five has also had a dual remit. As well as developing a standard pre-qualification form for public sector work, it has been considering the issues relating to the creation of a single register of contractors seeking public sector work, based on the existing contractors management information system. The working group's report has been approved by the board; as mentioned earlier, DOE has let a contract for the redevelopment of the contractors management information system.
Moving away from the production of codes and guidance notes, working group six was tasked with preparing a report identifying action for Government and for the industry on construction training for craft workers and operatives. The working group has produced a summary report with recommendations, which take account of the actions of the Construction Industry Training Board in implementing its new entrant training strategy. The working group also looked at the activities of non-CITB training organisations, the training of supervisors and technicians, the training needs of specialist trades, the delivery of training and its funding. That report is due to be considered by the board shortly.
Working group 7 is considering the image of the industry. Much of the criticism of the industry by outsiders is based on the industry's unfavourable image. Often that perception is based on a misunderstanding of the way that the industry operates or on misinformation or a general prejudice against what is perceived to be a dirty, noisy industry, which operates in unpleasant conditions. That unfavourable image is accepted as a significant problem and lies at the root of many of the problems that the industry has in dealing with the outside world.
The working group has produced several valuable ideas which have been accepted by the board. Plans are now in train to set up a national version of a considerate contractors' scheme, similar to that operated successfully by some local authorities. In addition, a marketing plan adopted by the hoard should lead to some exciting initiatives, which should go some way to counter the industry's poor image.
One of the outcomes of the industry's poor image is difficulty in recruiting women and ethnic minorities. The perception is that of an industry dominated by macho white men. Although that picture is not representative of the industry as a whole, it is not far enough from the truth to enable the industry to be counted as a true equal opportunities employer. Working group 7 was set up to tackle that problem, starting with equal opportunities for women.
The working group has gone to immense trouble to investigate the truth, examining all sectors of the industry to find out what the position is and what improvements could practically be made. Its aims are to encourage the development of attitudes, practices and physical environments that do not disadvantage women, and to encourage more women to enter the industry at all levels, trades and professions and to progress in it.
The working group's report includes an equal opportunities code of practice and an implementation plan for use at company level. The report has been adopted by the board, which aims to publish it soon.
Working group 9 considered the education of construction professionals. There have been several reports on that subject in recent years. The working group's task was to consider how best to achieve implementation of those recommendations that have received general industry support. The working group's solution was to produce a list of what it called "learning outcomes"—in other words, attributes that those graduating in construction disciplines should have acquired, as well as attributes that are appropriate for those undertaking continuing professional development during their careers. Those learning outcomes should better equip construction professionals to exercise management and business skills as well as professional judgment and awareness. The report has been adopted by the board and is in the process of being implemented.
A great deal of very good work is going on in many academic institutions, encouraging cross-disciplinary teaching in the construction industry. Not long ago, I visited the University of Central England in Birmingham, in the Perry Barr area, and was greatly impressed by what it is doing. I am sure that that is one of the ways to approach future professional education.
The House will have noted that the Bill omits any provisions on the subject of liability for construction defects, but that does not mean that the work carried out by working group 10 has been wasted. That working group was tasked with taking forward the recommendations in "Constructing the Team" that related to liability and insurance matters. It has produced three reports so far—on liability law reforms, latent defects insurance and supplier's liability. Some of the liability matters are currently under consideration by the Law

Commission, and the working group's reports will provide useful material for the Law Commission's consideration.

Ms Joan Walley: In view of that working party's findings about the construction of properties, what does the Minister propose, in legislation now before the House, in response to the anxieties of people in my constituency who have houses built under the Shindler method of construction, who are unable to claim as eligible owners?

Mr. Jones: With the greatest of respect to the hon. Lady, I do not believe that that relates to what is in the Bill. The issue of liability, in a much wider sense, is highly relevant to the reputation of the construction industry and to the problems which some people experience, but as construction can be considered, not in the narrow, but only in the wider, context, we must await what the Law Commission says.
The Law Commission recently reported on joint and several liability, and working group 10 has been reconvened to consider and respond to the Law Commission's report. Meanwhile, the working group is in discussion with the Association of British Insurers on the development of latent defect policies.
Working group 11 was charged with putting flesh on the bare bones of the 30 per cent. cost reduction target by considering what productivity improvements could be achieved and how best to achieve them. The working group's report has been approved by the board. It includes reports from sub-groups on benchmarking, quality and information technology, together with proposals for acting on its recommendations. It accepts the target of a 30 per cent. cost reduction in real construction costs as realistic and achievable, and identifies barriers that need to be overcome to secure such cost reductions. It also makes several research proposals, and emphasises the need to collate and disseminate best practice knowledge in a usable form to achieve significant productivity improvements. The board has delegated implementation of several of the recommendations to groups such as Construct IT and the Construction Research and Innovation Strategy Panel—CRISP—as well as setting up a new task force on cost reduction.
Finally, working group 12 was set up relatively recently, in June 1995. Its objective is to promote the practice of partnering, where appropriate, in both public and private sectors by establishing best practice benchmarks, facilitating the widest dissemination of good practice and ensuring the development of appropriate training and education packages. It has commissioned a scoping study of current practices and existing guidance to identify gaps in guidance and the need for additional promotion. It expects to complete its work in the autumn.
Before leaving the subject of the Construction Industry Board, I pay tribute to Sir Michael Latham for his invaluable work as the board's first chairman. Sir Michael recently stepped down after more than a year and a half at the helm of the board and its predecessor, the review implementation forum. As the board embarks on a longer-term business plan, he has handed over to Sir Ian Dixon, who has already been driving forward change in the industry.
I have reviewed the aspects of Latham being advanced by good practice initiatives, but there are two main areas in which Latham and the Government shared the view


that good practice alone may not be enough to affect the radical change that we are seeking from this industry. These two areas are dispute resolution and payment, and it is in those areas that we propose legislation.
From the start, we applied two tests to this: the first, that there should be some consensus within the industry—I do not mean unanimity, but a consensus—and the second that there should be a workable, practical solution. That has led to a very difficult process of negotiation, because—

Sir Peter Fry: Does my hon. Friend agree that the best way to secure the admirable objectives that he has just stated would be to have the widest possible definition of construction operations? I pay tribute to him for having widened the definition already and listened to representations on that point, but can he confirm that he remains open to further arguments, such as from the Electrical Contractors' Association, for further widening of the definition to include matters such as maintenance? The widening of the definition will obtain the maximum benefit from this piece of legislation.

Mr. Jones: I thank my hon. Friend for his comments. He has taken an active interest in those matters on behalf of, not only his constituents but a wider spread of people who have a significant interest at stake. I shall say something about definitions later, but we have always made it clear that we want to see the widest possible definition consistent with excluding those areas where there is no problem in practice, and of course the building material suppliers, because obviously they are in the same position as those who supply any other form of goods. Getting those definitions right in law is an extremely complex process; that is why there has been such a lively debate about it in the industry and in the other place.

Mr. Den Dover: Is that why my hon. Friend intends to exclude process engineering—because he is happy that there is not too much litigation in that field?

Mr. Jones: As my hon. Friend said, the process engineering industry made it very clear to me—the record speaks for itself—that it has not had the same dispute and payment problems as the construction industry as a whole. That is why we decided that that industry should be excluded. In reaching that conclusion, we do not seek to exclude ordinary construction processes—there is sometimes a little of both on site. We are trying to address that consideration without embracing an industry that does not have any real problems.
We have made a judgment based on the practicalities. The negotiation process is difficult because consensus is not always fixed. The legislative process has provided an opportunity for people to advance new points of view or to put a new emphasis on existing concerns. That is one of the reasons why some of the legislation will be dealt with by way of statutory instrument instead of being on the face of the Bill. It seems quite likely that we shall want to respond to changing practices within the industry. Therefore, we should not lay down hard and fast rules that apply now but which may become outdated. Obviously, I hope that the construction industry will put its house in

order so that the Government never have to intervene again. However, that will not necessarily occur and we shall want to respond to any changes.
If problems arise outside the area for which we have legislated, it seems reasonable at this stage not to preclude any changes in definition. We shall watch developments in all parts of the industry. We have adopted a flexible approach, which will be welcomed in the construction industry—and I suspect that it will not create divisions in the House.

Sir Anthony Durant: On the question of flexibility, part II of the Bill mentions contracts. When will the legislation come into effect, and what is the position regarding existing contracts, about which there is widespread concern?

Mr. Jones: I understand that concern, but it is not the practice of the House to legislate retrospectively. Various clients have introduced many improvements already. The date when the legislation comes into effect will be determined by its progress through the House—it has passed through the other place. As to flexibility, we shall listen to points raised by all hon. Members in order to ensure that we have got it right. I hope that that reassures my hon. Friend.
The debate so far illustrates the difficulty of shuttle diplomacy in this area. There are many conflicts of interest, not just between different umbrella groups but within them. I suspect that my officials who have not been exhausted by the process may be called to act as negotiators in future crises in Yugoslavia, the far east or wherever, such are the diplomacy skills that they have developed.
The Bill promotes a clear system of dispute resolution called adjudication. The industry is clear about what it means by that: it wants a mechanism that produces a fast and impartial resolution of a dispute and allows the contract to continue. The industry does not want the decision necessarily to be the final one. It wants to ensure that disputes are tested at the time, on the spot and are resolved quickly to the parties' satisfaction.
Our provisions provide a right to refer construction disputes for adjudication. We expect that entitlement to be met normally by the construction industry deciding, as a matter of course, to include adjudication arrangements in its contracts. The Government are challenging the industry to take action to improve its contractual practice and to introduce the sort of adjudication arrangements that best suit it. The best outcome must be that there is no need for a fall-back.
However, we have a view about the minimum standards that contractual adjudication clauses must satisfy. They relate to speed of decision, impartiality, and the freedom for an adjudicator to investigate disputes and reach his own conclusion. In another place we added the necessary provision to give adjudicators protection from personal liability so long as they act in good faith.
The Government are conscious that one party to a contract may think that it can tip the scales in its favour if it strikes out the adjudication clause. That is the industry's experience until now. If there is no adjudication provision in a contract, or the clause is defective in any way, we shall provide a fall-back adjudication mechanism in our scheme for construction contracts, to be made by statutory instrument.
The Bill acts to improve payments in the industry. It abolishes "pay when paid" clauses, except in the event of insolvency. It is relatively common for contractors to refuse payment to the next contractor down the line until they have themselves been paid by their client. At worst, that can lead to delays in payment lasting months. The Government do not consider that to be acceptable and we wish to put an end to that practice. I have always said that if the industry treats its subcontractors badly, it will end up with bad subcontractors—and that is not in the interests of the industry.
The Bill also provides a right to payment by instalment on longer contracts and establishes a notification system for payment. If there is any intention to withhold payment on its final due date, a notice must be served specifying the reasons for withholding that payment. There is a multiplicity of possible payment arrangements for construction contracts. It is not for Government to decide that one is better than another: no doubt they all have their place.
However, Parliament can legislate to ensure that contracts are be clear about what payments become due and when. We can ensure that information about payment is available to the payee. We can agree arrangements which expose unreasonable grounds for withholding payment and which can be challenged before an adjudicator. That is the basis of what we propose.
I shall now outline the adjudication and payment scheme. Under the Bill, there will be a scheme establishing, first, a fall-back adjudication provision if the contracts agreed by the construction industry do not adequately provide one; and, secondly, relevant payment provisions if the contracts signed by parties are inadequate.
When the Bill was being considered in another place, we set out a first shot at the scheme so that Parliament could see how it might fit the workings of the Bill. The construction industry told us that our illustrative adjudication scheme was not to its liking. We have taken account of those views and we intend to modify our proposals. My Department will undertake a consultation exercise following Royal Assent which will set out the detailed options for a statutory adjudication scheme.

Mr. Dover: While welcoming the fact that reflection upon the legislation's passage through Standing Committee will assist the follow-up of the regulations after Royal Assent, should they not receive parliamentary scrutiny also? Should not the necessary clauses be carved out during the legislation's passage through Standing Committee? Perhaps my hon. Friend has set his mind against that course and is waiting for Royal Assent.

Mr. Jones: We are consulting about that, but the Bill provides for a statutory instrument approach. The House will have the chance to debate those matters if it so chooses and we shall see what emerges. There are several potential variants and we shall not prejudge what the final adjudication scheme will look like—that is in the hands of the industry.
Let me put beyond any doubt our intention that the scheme will come into effect only if construction contracts are deficient in any way. Our aim is to encourage the industry to get its contracts right. Furthermore, we are providing adjudication and not

arbitration. We intend to propose that parties be required to abide by an adjudicator's decision until practical completion of the contract, but that thereafter they may reopen the dispute.
I re-emphasise the remarks by my noble Friend Lord Lucas during debate in the other place. We do not intend that adjudication should be used simply to postpone resolving disputes. We have had enough of disputes within the construction industry. Government, the industry and its clients want to see an end to them: they are expensive and damaging to the industry's productivity and reputation. We want to see the industry using the opportunity that we are giving it to improve its payment record and to resolve disputes quickly, without dragging them into arbitration or before the courts.
We intend the Bill's provision to cover a wide span of the construction industry. After all, that industry asked for the Bill. It desperately wants revised payment arrangements and the ability to resolve disputes quickly and easily. The Government welcomed the debates in another place because they helped to refine and widen the definition of construction operations. We shall be tabling a number of amendments in Committee as a result.

Mr. Anthony Coombs: Who will decide whether construction contracts include adequate provisions for payment or adjudication? If it is to be the Construction Industry Board or a similar organisation, there will be fears that contracts will have to be submitted very early in the construction process and that delays will be incurred while they are being considered.

Mr. Jones: If the contracts do not meet the tests that I have set out, they will be in conflict with the law and, under the statutory instrument, they will be null and void. Therefore, any party to those contracts will be able to fall back on the scheme that we have prepared.

Mr. Coombs: My question related not to the criteria by which those contracts will be null and void, but to who decides and when. That is a crucial matter for those entering such contracts.

Mr. Jones: As I said, the decision will go back to the courts. If there is a problem with a contract that does not meet our particular test, any party to such a contract will be able to seek redress under the Government's fall-back scheme.
In respect of definition, we are currently looking at supply and fit contracts. It is not our intention that the Bill should apply to suppliers of building materials and components as other provisions, such as the Supply of Goods and Services Act 1982, apply to them. Some construction contracts, however, require the manufacture of specialist building components as well as their fitting—such as those in respect of air-conditioning equipment. We hope to extend the Bill's provision to those contracts. Such a change will be widely welcomed, especially by smaller specialist contractors in construction.
We are also clarifying the exclusion of process engineering that was mentioned by hon. Friend the Member for Chorley (Mr. Dover). Examples of that are oil refining and chemicals. There has been much unnecessary confusion. We want to make it absolutely clear that only


the plant and machinery and its associated steelwork are excluded from the Bill and not wider construction operations on process engineering sites.
The Bill also reforms the help that we give to the renewal of private-sector housing. It aims to give local authorities the flexibility that they need to direct resources effectively, giving help where it is most needed and to maximum effect.
We have come a considerable way from the days of wholesale and unquestioning slum clearance which could too easily destroy close-knit local communities. We have provided for the basic amenities—inside lavatories and separate bathrooms—and we now need to consider how the money available to help remedy the remaining unfitness should be used.
We have left behind the days when it was thought necessary to spread resources widely so that everybody got something. There are fewer unfit properties, with the number of unfit occupied private sector houses falling by 7 per cent. to about 1 million between the English house condition surveys of 1986 and 1991. One third of those could be made fit for under £500 each and are owned by people who could easily afford the cost.
We need to stand firmly on the principle that home owners are primarily responsible for repairing and maintaining their properties. In 1991 alone, home owners spent £20 billion on repairs and improvements to their homes. The need for public expenditure on private-sector renewal arises only where people really cannot afford to undertake repairs. It represents only about 2 per cent. of the total amount spent each year on repairs and renovation in the private stock.

Mrs. Helen Jackson: When examining grant aid to private and public home owners, did the Minister consider improving water efficiency and water safety in people's homes? I am particularly concerned about the replacement of lead piping in public and private-sector properties. The Institute of Plumbing is keen to promote that, partly because 50 per cent. of trainee plumbers finish their NVQ training without any suitable site experience. That problem would be redressed by a major programme of grant aid for lead replacement.

Mr. Jones: The hon. Lady raises an interesting point and seeks to widen the definition of unfit. Hon. Members have made a number of suggestions as to whether the present definition applies to the modern world. The Bill does not alter that definition, but no doubt the hon. Lady will seek an opportunity to debate why not or whether it should be changed in one way or another.
We have to strike a balance between what central Government tell local government to do and what local government is left to decide for itself in targeting expenditure effectively. The Bill moves the balance towards local government following the principle that, as we move towards targeting expenditure at those in greatest need, we need to increase the decision-making power of local authorities in respect of priorities.
The current framework for renovation grants in the Local Government and Housing Act 1989 was set up to do just that. It was intended to encourage a more strategic and area-based approach to addressing the need for

renewal and renovation. It targeted help better on poor condition houses and poorer people and introduced a grant to give systematic help to disabled people. It also gave a right to mandatory grant to people on low incomes living in poor housing.
It gave local authorities a good range of tools, but experience has shown that the pressures for grant assistance have resulted in mandatory grants taking the lion's share of resources. That has distorted any strategy that local authorities may have developed and area-based activity has been undermined in many authorities.
The achievements of the current system are considerable. Nearly 500,000 grants have been awarded since 1990–170,000 of them were awarded to help make properties fit.

Mr. Gordon Prentice: Does the Minister accept that people with a legal right to mandatory grants did not get them and there was a de facto system of rationing? That is certainly the case in my local authority area in Pendle and elsewhere in north-east Lancashire.

Mr. Jones: The hon. Gentleman highlights a point that has been raised many times by individual local authorities. It is precisely why almost all the local authorities that I met during my time as Minister responsible for housing told me that they wanted an end to the mandatory system which would also enable them to avoid the pepper-potting that occurs under the present arrangements.
Reform is necessary. In many areas, a strategic approach aimed at the renewal of an entire area or focused on particular problems is likely to be more cost-effective than meeting individual needs as they arise. Most local authorities accept that. What we hear from them—rather than from the local authority associations—is that the move away from the mandatory grant system will allow them to be more effective in using grant to meet their local needs and priorities.
Central Government will continue to provide special funding for local authorities in the form of grant. That will ensure that local authorities continue to prioritise expenditure and do not divert resources into other areas.
As the hon. Member for Pendle (Mr. Prentice) raised the matter, perhaps I could ask about Labour's opposition to the abolition of mandatory renovation grants. The Opposition have not even said whether they would reverse the legislation in the unlikely event of their forming the next Government. If they do not intend to at least they should have the honesty to support the sensible measures in the Bill, as many Labour councillors do. If they would reinstate mandatory grants, they should tell us where they would get the money to do that. Unless the Opposition give us a firm pledge on what they would do, their opposition to the Bill is absolutely worthless.

Mr. Nick Raynsford: The Minister has implied that the reinstatement of mandatory grants would require additional expenditure. Will he give us the Government's estimates for next year's expenditure without mandatory grants as his comments imply that there will be a reduction in expenditure?

Mr. Jones: The Government's plans have been published and show level pegging into next year.

Mr. Raynsford: If the Minister now concedes that there will be level pegging, how will the reintroduction of mandatory grants lead to increased expenditure?

Mr. Jones: The hon. Member for Pendle raised that point. With or without mandatory grants, there will be queues if we keep to the present arrangements. That is a reasonable issue to debate. We concluded that we should end the mandatory grants system. If the Opposition's response is that the mandatory grants system should be retained, but that money should be made available to deal with the present demand-led system, they should say so and let us know where the money will come from.
The Bill retains mandatory and discretionary disabled facilities grants, which are designed to help disabled people stay in their own homes. It relaxes the means test so those caring for disabled people, other than spouses, will no longer be expected to contribute to the cost of adaptations. Disabled adults living, for example, with their parents or children will be more likely to receive grant.
There was a useful discussion in the other place on those provisions and as a result, we have included a less dated reference to disability for the purposes of the Bill, replacing one that had been based on the definition in the National Assistance Act 1948. We have ensured that the wide eligibility has not been prejudiced by such a change, and I hope that the new definition will command the agreement of the House.
The Bill retains grant assistance to landlords on a discretionary basis, allowing local authorities to decide the level of grant to award to landlords and introducing the possibility of attaching conditions—such as nomination rights and good maintenance, to assist in securing strategic aims.
The Bill also simplifies and replaces the minor works assistance scheme. Local authorities will continue to be able to give help for minor repairs, improvements and adaptations through home repair assistance to the elderly, infirm, disabled people and persons on means-tested benefits. I welcome what is being done to bring into eligibility people living on houseboats and in mobile homes.
There was some debate in the other place, which was continued this afternoon, about the current standard used to assess the fitness of a property. We have announced the intention, once the Bill is out of the way and before the end of the year, to begin a review of the housing fitness standard, which will ensure that the requirements of the standard and its application are properly considered.
The Bill also reforms the system of architects registration. In the United Kingdom, to use the title "architect" a person must be registered with the Architects Registration Council of the United Kingdom—know by its acronym of ARCUK. Anyone is allowed to design buildings, but they cannot use the title "architect" unless they are registered with ARCUK. Our proposals seek to reform that body. For the sake of clarity, I should mention that the Royal Institute of British Architects is a separate professional organisation to which most, but not all, architects belong. It is not affected by this legislation.
The reason for reforming ARCUK is that since it was established in 1931, it has grown large and cumbersome and it has taken on functions that are not strictly concerned with registration. Moreover, the council has

difficulty in enforcing protection of title. Because of those problems, ARCUK asked the Government in 1991 to review the architects registration legislation. The Government commissioned John Warne to undertake a review, and his subsequent report highlighted the inefficiencies of the existing registration system. John Warne's recommended solution was to repeal the architects registration Acts and to abolish protection of the title "architect". The Government were initially prepared to accept that recommendation but, in view of the strength of feeling against abolition, agreed instead to explore ways of improving the existing system.
As a result, the Government worked with the profession to produce an agreed package of reforms. The subsequent public consultation revealed a strong level of support for the proposed reforms within and without the profession. Our proposals build firmly on the existing pattern of regulation in the architects profession and streamline the registration body. They reduce its size from 73 members to 15 and remove unnecessary committees. They limit the council's functions to matters strictly related to registration and discipline, and they create a genuinely minimalist body that we expect to remain minimalist.
The reforms provide for the profession, its customers and the public to be represented on the board. The changes are designed to maintain a high level of public confidence in the standards of the architectural profession and they provide a channel for complaints where those standards are not met.
The Bill also includes provisions to extend the powers to give financial assistance for regeneration and development, to provide a single legislative basis for the single regeneration budget, which currently operates under a range of powers. The SRB brings together a number of programmes to provide co-ordinated support for regeneration initiatives in England. New schemes are supported through the competitive challenge fund, which has already been widely welcomed as a success. That success was endorsed in the recent report by the Environment Select Committee on the conduct and outcome of the first challenge fund bidding round. The Committee concluded that the challenge fund had already demonstrated its potential to achieve excellent value for taxpayers' money. Local partnerships have submitted high quality bids, reflecting tremendous co-operative effort towards the successful regeneration of their areas.
The Bill is wide ranging and addresses many problems. I have no hesitation in commending it to the House.

Mr. Frank Dobson: I welcome the Minister, who moved the Second Reading in the absence of his boss, the Secretary of State for the Environment, who is variously reported as being in Norfolk and in Derbyshire. I believe that the right hon. Gentleman is trying to track down the last remaining Tory councillors in those areas.
This is the second housing Bill that the Government have introduced this year. Like the first one, this Bill does not measure up to the housing problems faced by so many people. It does not even address most of their difficulties. As with the Housing Bill, the Government's proposals will make matters worse—certainly for owner-occupiers and private tenants whose homes need to be repaired; the Bill deprives those people of their right to renovation grants.
Anyone who listens to people in Britain today—whether in city centres, suburbs, market towns or villages—knows that millions of people feel insecure in their jobs, on the streets, about their pensions, about the prospects for their children and grandchildren, and about their homes. The Housing Bill ignored the insecurity of owner-occupiers and only tinkered with the dangers and insecurity faced by people who live in houses in multiple occupancy. It claimed to help leaseholders, but failed to deliver. It increased the insecurity of private tenants and made homeless people even more insecure.
The Housing Bill was improved in Committee as a result of the efforts of my hon. Friends—in particular, by the spectacularly well-informed contributions of my hon. Friend the Member for Greenwich (Mr. Raynsford). By ancient and ridiculous custom, the House confines the description "learned" to Members of Parliament who are Queen's counsel. My hon. Friend the Member for Greenwich is truly learned on the subject of housing. He is certainly the most learned in the House and among the most learned in the country, and more learned on the subject than me. Even the combined efforts of my hon. Friend the Member for Greenwich and all the other Opposition Members in Committee on the Housing Bill could not turn that legislative sow's ear into a silk purse.
The first part of the Housing Grants, Construction and Regeneration Bill covers housing. It does not just ignore problems or pretend to deal with them—it will make matters worse for many people. The Bill will take away the right of owner-occupiers and tenants to grants for repairing their homes, so it will protract the enormous backlog of disrepair that has left 1.5 million homes unfit for human habitation. The problem afflicts people throughout the country. There are 79,000 unfit homes in the north-east, 257,000 in the north-west, 160,000 in Yorkshire and Humberside, 116,000 in the east midlands, 200,000 in the west midlands, 114,000 in the south-west, 149,000 in the south-east—excluding London, and more than 240,000 in London.
The fact that a property has been officially designated unfit for human habitation does not mean that no one is living in it. Most such properties are still used—that, after 17 years of Tory government. The Government's appalling housing record is not confined to leaving millions of people in homes that are unfit for human habitation, but goes much wider. The Government, having encouraged the public to become owner-occupiers, turned around and kicked millions of people in the teeth.
The Tories can no longer claim to be the party of owner-occupiers—far from it. Theirs is the party of repossessions, mortgage arrears and negative equity. One million or more families live in homes worth less than their mortgages. Negative equity preys on the minds of more than 180,000 families in London, 400,000 in the south-east, 160,000 in the south-west, 90,000 in the east midlands, 60,000 in the west midlands and 50,000 in the north-west. Negative equity is something new. It is the Tories' latest addition to the lexicon of housing misery and their novel contribution to the tide of insecurity that afflicts so many families.
That is not the end. A quarter of a million families are seriously in arrears with their mortgage. Under Labour, serious arrears affected only 10,000 families. So mortgage

arrears under the Tories are 25 times worse than they were under Labour. That is another bitter, depressing and unsettling Tory contribution to family insecurity.
People who are in arrears fear that their homes will be repossessed and they are right to fear repossessions, because about 50,000 families a year have their homes repossessed. Repossessions under the Tories are running at 17 times the rate under Labour. So there are 17 repossessions under the Tories for every one repossession under Labour. The figures work out at about 1,000 repossessions a week.
Since Second Reading of the Housing Bill, which did nothing for owner-occupiers, about 14,000 more families have lost their homes. That has all happened under a Prime Minister who told the British people at the general election:
We stopped the repossessions just before Christmas"—
and:
We are going to make life easier for people buying their own home"—
and:
We will maintain mortgage tax relief.
No wonder Mrs. Thatcher has said:
You can imagine my honor when the Government which succeeded me cut mortgage tax relief. It's not fair on all those young people who bought in the knowledge that it was there.
It is not just owner-occupiers who have been hammered by the Government. They have also hammered tenants. Average council rents are six times as high as they were under Labour. In the past five years, they have risen by more than three times the rate of inflation. In the same five years, while the retail prices index rose by 27 per cent., housing association rents went up by 85 per cent. Rent rises in the private sector have been even worse. As a result, the cost to the taxpayer of housing benefit has risen from £4 billion a year to £10 billion a year—and a great deal of that money has gone straight from the taxpayer into the pockets of the landlords and moneylenders who bankroll the Tory party.
That is not the only help that the Tory party has given landlords. The Tories' betrayal of the hopes of leaseholders shows where their loyalties really lie. The Government said that they would help leaseholders, but they did not. The Government tried to con people that they were the leaseholders' friend, but the only people they conned were Tory Members of Parliament who voted to look after the landlords who bankroll the Tory party rather than the interests of the thousands of leaseholders they claim to represent. That is the only possible explanation of why Tory Members of Parliament who represent more than 1 million people in places such as Brighton and Hove, Kensington and Chelsea, Ealing, Merton, the Wirral, Southend, Wandsworth, Fulham and Barnet, last week joined the Government to vote down our proposal to give leaseholders the right to manage and other proposals to strengthen the hands of leaseholders in their dealings with unscrupulous landlords.
The Government have weakened the position of homeless families by putting through laws to leave them in perpetual insecurity, living for ever—

Madam Deputy Speaker (Dame Janet Fookes): Order. Before the hon. Gentleman continues, may I remind him that we are debating the Second Reading of


a Bill which does not encompass all housing matters? This is not a general debate on housing. I am prepared to allow a certain latitude by way of background, but it must not allowed to become the foreground.

Mr. Dobson: I wish to point out, Madam Deputy Speaker, that the Bill has 102 clauses, which relate to the circumstances of owner-occupiers, tenants and landlords, and that those are the matters to which I am referring. I am coming to points that are directly involved in the Bill, but I understand that a debate on Second Reading allows general points to be made and attention to be drawn to the fact that the Bill does not deal with many of the housing problems that people face.

Mr. Dover: As the hon. Gentleman has wandered away from the subject of the Bill, I want to put him to the test on one matter that he has raised. He gave the impression that, under the Prime Minister, mortgage tax relief would disappear. It is still there and it will be there until the next general election. Can the hon. Gentleman spell out whether it will last after the general election, should the Labour party win?

Madam Deputy Speaker: Order. I hope that the hon. Gentleman will not be tempted down pathways that have little to do with the Bill.

Mr. Dobson: I shall make two points in response to the hon. Gentleman. First, I have not wandered away from the Bill, but the Bill has wandered away from the housing problems of people. Secondly, I said nothing about what the Prime Minister intends to do about mortgage tax relief. I mentioned his promise to keep it and his decision to go back on that promise and reduce it twice.
The Government have reduced and weakened the position of homeless families by putting through laws to leave them in perpetual insecurity, as I have said. The Government reject the commonsense answer to homelessness, overcrowding and homes unfit for habitation—that is in the Bill—which is a house-building programme. The Government, to use the new, bureaucratic jargon, have downsized the building programme. They inherited a council building programme of 54,000 new homes. By last year, they had downsized it to 404. Labour built 135 new homes for every one built under the Tories. No wonder homelessness has doubled under the Government.

Mr. Robert B. Jones: Since the hon. Gentleman has clearly implied that the Labour party would increase the programme, will he tell us to what level he would increase it, and from where the finance would come?

Mr. Dobson: We have made it clear—I shall come to this matter in my speech—that we believe that the Government, let alone the next Labour Government should—

The Parliamentary Under-Secretary of State for the Environment (Mr. James Clappison): Answer the question.

Mr. Dobson: Let me finish. If the Government had any sense, they would allow councils to start to invest the takings from the right-to-buy sale of council houses in building homes for people who have nowhere to live.

Mr. Jones: Will the hon. Gentleman give way?

Mr. Dobson: Let me finish the point. The Minister has asked a question and I am trying to answer it.
We have been urged by people in the building industry to ensure a phased release of the money, because they do not want to go back to the boom and bust that the industry suffered before. If the Minister does not like the answer, that is tough.

Mr. Jones: I do not like the answer, because it is not a full answer. Housing publications have condemned the Labour party's calculations as wholly unreal on that point. What would be the consequences for council tax payers of spending even a further 20 per cent. of the sums that are on deposit?

Mr. Dobson: It is no good the Minister chiding me about the idea of councils being allowed to spend the takings from the right-to-buy scheme. The Government permitted councils to do that for one year because they thought it was popular. In Scotland, the Government have insisted that councils spend every penny of their takings. The Minister should not suggest that there is anything odd or dangerous to public finance about what we suggest.
If we consider the figures on homelessness in every part of the country and the amount of houses being built, we see that Labour built 9,000 new council homes a year in London. Last year, the Tories managed just 22 new homes to help the 29,000 families who are officially accepted as homeless. In Yorkshire, under Labour, 4,000 new homes a year were built. Last year, 24 were built—but there are more than 11,000 homeless families in Yorkshire. In the north-west, Labour built 8,000 new homes a year. Last year, the Tories managed just three—not 3,000, not 300, but three—to help meet the housing needs of 18,000 families in the north-west who have nowhere decent to live. In the south-east outside London, Labour built 11,000 homes a year. The Tory grand total is 47. There are 18,000 homeless families in the south-east outside London.
I could give other examples. Ministers and Government apologists will say that, although council house building has been reduced, housing association building has expanded. That is true, but it has not made up the difference. Council and housing association building averaged more than 134,000 a year under Labour; under the Government it is running at 34,000 a year—100,000 fewer. Even housing association building is being cut now.
The common-sense answer to the problem, which has been pursued by all Governments since the 1930s, is to build more homes for people who are homeless or living in overcrowded or degrading conditions. That is why Labour has pledged—I repeat—to introduce a phased release of the takings from the right-to-buy sale of council houses for investment in new housing. That would be good, not just for the families who would get new homes, but for jobs in the building industry and the building supply industry, such as brick makers in Bedfordshire, carpet weavers in Kidderminster, and the people who make central heating boilers in Belper, electrical fittings in Basildon or lavatory pans in Stoke-on-Trent.
Jobs would also be created if people were set to work renovating homes—but the Bill wants to cut house renovations. That is why it proposes to take away the right of householders to a renovation grant to make their homes fit for habitation. That is nothing wildly luxurious. It is to make their homes structurally stable, free from serious


disrepair or dampness which harms a family's health, to provide proper heating, lighting, ventilation, wholesome piped water—if it is lead-filled it may fall outside the definition of wholesome—a bath or shower, a lavatory, drainage of foul water and a decent place to prepare food. Those are basic standards—nothing luxurious.
At the moment, people have a right to such grants, but not for much longer. The Government are proposing to take away that right. Let us be clear. A substantial proportion of the people whose homes need bringing up to those basic standards are elderly or hard up, or both. As the number of old people increases, and as the policy of care in the community leaves more people in their own homes, the requirement to bring homes up to scratch will increase, not diminish.

Mr. Robert B. Jones: As the hon. Gentleman is criticising the Government for taking away mandatory grants, will he tell us whether a Labour Government would restore them—yes, or no?

Mr. Dobson: The Government have not managed to take them away yet. The Opposition may be able to stop the measure going through. We shall certainly try. We shall expect all minority parties and any Tory Member who claims to look after owner-occupiers to join us.
The Government's response to the problem is not to build more houses or do more rehabilitation; it is, as usual, totally bureaucratic. They are changing the rules rather than getting the work done. The Government want to take away householders' right to a renovation grant because too many householders have been exercising that right. The Government are nothing if not wrong headed.
The scheme for mandatory renovation grants has had a high take-up and was doing a lot of good, so the Government have decided to drop it. Contrast that with their infamous rent-to-mortgage scheme, which is an abject failure. Despite expensive advertising, precisely 15 families have availed themselves of it, but the Government will keep it going. Their slogan appears to be, "If it works, drop it. If it fails, keep it." That may be a sneak preview of the slogan that they have thought up as their last desperate bid to win the coming general election.
In future, grants will be available only at the discretion of a local council. That will increase the bureaucratic burden on, and administrative costs of, every council. Councils will be encouraged to exercise their discretion in favour of not making a grant because they are to be given the right to defer action year after year even where houses are so unfit that repair notices have been served.
In the other place, the Government rejected an amendment that would have enabled grants to be made to provide fuel-efficient space heating. That would have been an enormous benefit to many families whose unfit houses are the very opposite of fuel-efficient, and leave families often old, certainly cold and frequently skint. Investment in renovation grants has fallen to £270 million from more than £400 million three years ago. It is an illuminating illustration of the Government's priorities that they are cutting the funds available to bring 1.5 million homes unfit for habitation up to decent standards while giving increasing tax concessions—in the most recent year totalling more than £60 million—to rich people who inherit stately homes.
The Bill also extends the scope of home energy efficiency grants. A fat lot of good that will do. The Chancellor of the Exchequer, in his November Budget, slashed one third off the money available to that scheme, so the combined effect of this change and the Budget will mean less money spread more thinly.
The Government are trying to shift the responsibility for cutting house renovation on to local councils. They hope that councils will be blamed for turning down claims for home renovation grants. The Government say that the proposed change will make it easier for councils to promote group repair and area renewal policies, but it is just as likely that the limited funds that they are making available will be used up simply coping with grants to fund the most urgent repairs and to disabled people. Instead of hitting owner-occupiers and tenants in that way, the Government should have examined, with other agencies, including lenders and builders, other ways of stepping up funding, rather than cutting it.
At the moment, councils can deal with unfit homes by asking owners to improve them. If that response does not succeed, they can serve repair, closure or clearance notices. For people who are trying to live in such places, which are officially recognised as unfit for habitation, the enforcement procedures for the orders are already protracted, cumbersome and unsatisfactory. Up to now, any delays have been despite the law and the intentions of Parliament. If we accept that councils can issue a notice formally to defer action on a place unfit for habitation, delay will become the law of the land. That may be all very well for the dodgy landlords who fund the Tory party, but it will be hell for the tenants. Just think about it. For the first time this century, the law will say to families that the place in which they are living is unfit for habitation, but that it will stay that way—by law.
I come next to those parts of the Bill that deal with the construction industry. The Latham report—we pay tribute to Sir Michael—published in 1994 recommended that the productivity, effectiveness and efficiency of the construction industry could be improved substantially by making changes in the culture, procurement methods and contractual basis under which the industry has operated. It recognised that relations between clients, consultants, contractors and sub-contractors had been far too adversarial and that that had been to the detriment of all concerned.
Latham recommended that more emphasis should be placed on quality, as well as price, and that well-informed clients and well-chosen consultants and contractors could, between them, achieve economies, save time and obtain better quality work, and that they would do that best by co-operation and team work. Making profits by getting a job well done, to cost and on time, would be better than the present system, which has often reduced clients, contractors and sub-contractors to trying to rip off one another in order to stay in business. Many have ended up suing through every court in the land. That has done wonders for banisters in my constituency, but it has not helped to establish an efficient and cost-effective building industry.
That sensible view was welcomed by most people in the industry and it may even have been welcomed by Ministers at the Department of the Environment, but it was and remains anathema to the Department of Trade and Industry, to many Cabinet Ministers and especially to the Deputy Prime Minister. They all advocate deregulated,


cut-throat competition as the answer to all the nation's ills. Those manic deregulators have been embarrassed by the Latham report because it recognises that the efficiency of the construction industry has been reduced rather than enhanced as a result of practising for decades exactly what the Government now preach will be good for every other industry.
The report, I am glad to say, also reflects the proposals being advocated by the Labour party for more investment in training and in research and development to bring about short-term and long-term improvements in productivity, quality and safety. Ironically, the previous under-investment in research and development in the construction industry should mean that any increased investment in research and development now will show bigger and more immediate returns than would be obtained in industries that had always invested heavily in research and development.
The Bill proposes changes in the law to bring construction contracts in line with Latham's proposals but, almost inevitably, it does not go far enough in some respects, while in one major area it goes right off beam. The definition of construction contracts in the Bill covers only about 50 per cent. of construction operations. The Government have promised changes to extend the definition, but we shall need to look at them carefully.
Where the Government have got it just plain wrong is in the detail of their proposals to provide for disputes to be referred to an adjudicator. At present, they propose that the adjudicator's decision should be not just binding, but final. That is not what the industry wants.

Mr. Robert B. Jones: I do not think that the hon. Gentleman was listening when I spelled that out. We certainly did not say that. I can reassure the hon. Gentleman on that point.

Mr. Dobson: Well, that is my understanding, and it is also my understanding that it is not what the industry wants. The industry would prefer an adjudicator who can make a quick, binding interim decision that is not final, but subject to review—what is sometimes described as a "pay now, argue later" decision. That is what Latham proposed and what the industry wants, but—perhaps as a result of the malign intervention of the Department of Trade and Industry—the Government were so incompetent that they could not get it right.
In response to almost universal condemnation of their proposals by people in the industry, the Government have said that they will withdraw and amend what the Minister described as the illustrative scheme of constructive contracts. We welcome that, but we shall press for clear and binding Government commitments in regard to what goes into that scheme before the Bill leaves the House. I remind Conservative Members who are concerned about the future of the construction industry of the promises—made from the Dispatch Box—that Railtrack would not be sold. Those promises ensured the passage of the Bill that became the Railways Act 1993, but they have somehow disappeared—and Railtrack is now being sold. We want those commitments from the Government. They need not be in the Bill itself, but we want the Government to make clear, irrevocable and binding commitments before the Bill is passed.
The scheme must also—as it is intended to—provide clear requirements for timely payments to contractors and sub-contractors, and make void any clause in a contract

that seeks to allow a contractor to pay a sub-contractor only when he himself has been paid. That is known in the trade as a "pay when paid" clause. We shall carefully scrutinise all aspects of the proposals in Committee and on Report because we believe that full legislative backing must be given to the recommendations in the Latham report and to the changes already set in train in the industry without the Government's intervention.
The Bill changes the arrangements for funding regeneration projects, whose present main vehicle is the single regeneration budget. We do not object to the clarification in the Bill, but although the "beauty competition" approach to regeneration may, in promoting local partnerships, have proved useful in the past, it is no longer generally required for that purpose. Working in local partnerships has become the standard practice of local councils.
I believe that the retention and expansion of the "beauty competition" approach owes more to Ministers' desire to go around the country claiming personal and political credit for the work of local councils, local businesses and the local voluntary sector. Perhaps that is what the Secretary of State is doing this afternoon. That approach represents what might be called the little Jack Horner syndrome: for the benefit of regional television and local radio and newspapers, Ministers want to be seen to put in their thumb, pull out a plum and say, "What a good boy am I."
There is too much central Government interference—too much ministerial interference. Too many local decisions are being made by unaccountable, faceless bureaucrats. Schemes such as this reek of the prejudice that "the man in Whitehall" knows best. That is a doubtful proposition at the best of times, but when we know that the man in question is the right hon. Member for Suffolk, Coastal (Mr. Gummer), it becomes a joke.
A section of the Bill that we do welcome is the provision for relocation grants in clearance areas, which is the product of an excellent initiative by Birmingham city council. That council, which is usually denounced by Conservative Members, has demonstrated both the need for and the value of such grants. They help to maintain communities while replacing much of the worst housing stock in inner-city areas. Our only concern is that, without the resources to back up the new grant, local authorities may well not be able to use their new powers to the extent that they would wish.
The Bill also empowers the Secretary of State to set up one or more residuary body to take over the assets and liabilities of the Commission for the New Towns, urban development corporations and housing action trusts. That idea is not as straightforward as it may seem. The residuary bodies set up after the abolition of the Greater London council and the metropolitan councils behaved like estate agents; members of the London residuary body behaved like very dodgy estate agents. Its behaviour over the disposal of county hall was deplorable, and remains a scandal to this day. There is reason to believe that that deal was pushed through by the then Secretary of State for the Environment—the present Deputy Prime Minister—in the days immediately preceding the last general election because he was determined that county hall should be sold before the election regardless of the cost and the harm done to anyone else.

Mr. Tony Banks: Is my hon. Friend aware that £10 million of the agreed £60 million


is still to be paid? It is not due to be paid until 2012, and there is precious little chance that London ratepayers will see any of it. That is what a residuary body does for us when it is set up by the Tories.

Mr. Dobson: I entirely agree with my hon. Friend. I have here a copy of the Public Accounts Committee's report—

Mr. Matthew Banks: What has that to do with the Bill?

Mr. Dobson: It has a great deal to do with the Bill. The Bill proposes the establishment of residuary bodies, or a residuary body. If those bodies are to be staffed by Tory placemen—and possibly placewomen—who are a gang of total incompetents, as is illustrated by what happened to county hall, everyone should be concerned.
Let me quote from the evidence given to the PAC. The Chairman asked Sir Godfrey Taylor, the boss:
Do you consider you obtained a firm bid from Shirayama?
Sir Godfrey replied,
Yes, I did.
The Chairman asked:
Why did you not hold them to it?
Sir Godfrey replied:
It was possibly the biggest disappointment I have had in my public life that we were not able to do that.
He was then asked:
But if you had a firm bid, properly backed by legal guarantees, you would have had them over a barrel would you not?
He replied:
We could not enforce it in the British courts.
This was a British body selling a bit of British property. When asked,
Why not?",
Sir Godfrey replied:
For the simple reason that we could not.
He was asked:
Why did you not get a bank guarantee then if you felt that way?
The answer was:
They were not willing to give us a bank guarantee.
He was asked:
Could you not have insisted on it?
He replied,
We could have.
That was the standard of the performance of one residuary body—the residuary body responsible for disposing of the most valuable asset possessed by any such body. We do not want any more scandals of that kind. I should have thought that even Tories who are bothered about standards of conduct in public life would be concerned about what has happened.

Mr. Nigel Spearing: Could there not be a greater risk in respect of the London Docklands development corporation? Under clause 139 of the Bill, any Environment Minister can establish any new quango
corporate to receive any property, rights or liabilities to be transferred by an order",
or—which is worse—
amend, repeal or otherwise modify any enactment for the purpose of enabling any body established under any enactment to receive such property".

If that is not quango-making, what is? And those proposals involve people who have behaved in the way described by my hon. Friend over county hall. Moreover, the proposals are to be implemented by means of a negative instrument, without the agreement of Parliament. Would it not be better to ensure that the proposals are at least subject to parliamentary approval?

Mr. Dobson: I agree with my hon. Friend. His area has been affected by the doings—and undoings—of the London Docklands development corporation, and he is right to be concerned about what will happen now. About all that the corporation has left is real estate, and that may be handed over to the residuary body. There will not even be the restraints, or alleged restraints, that have been imposed on the LDDC in regard to the disposal of assets. As in this case, a Deputy Prime Minister could decide to sell them off to one of his mates in Japan.
The Bill does not make clear who will get the takings from the sale of assets by the new residuary bodies. I shall stand corrected if Ministers can tell me that it does make that clear. In the case of the Commission for the New Towns, many councils covering new towns would like some of the money to be used to bring up to scratch some of the new town housing taken over by them or by housing associations which needs to be improved.
Councils representing areas covered by urban development corporations and housing action trusts will want some of the funds to be ploughed back into the areas where land and buildings are located, rather than being siphoned into some more prosperous area. I am sure that my hon. Friends who represent constituencies in the docklands area will agree that at least some of the assets of the London Docklands development corporation, whether still in the hands of the development corporation or in the hands of the residuary body, should be used to benefit the area that they were established to benefit, not shifted off somewhere else, or even sold to some flag of convenience so that it can use the docks.
All in all, this ragbag of a Bill fails to meet the housing needs of the people of this country. It takes away rights from owner-occupiers, fails to implement properly sensible proposals in the Latham report and does not make the required changes in funding to urban and rural regeneration. Although it contains some proposals that we support, we shall vote against it—above all because it takes away the right to renovation grants of owner-occupiers and tenants.

Sir Sydney Chapman: I am grateful for the opportunity to speak on Second Reading of—I stress the title—the Housing Grants, Construction and Regeneration Bill. It is interesting to follow the hon. Member for Holborn and St. Pancras (Mr. Dobson). Although I shall concentrate on parts II and III, I should like to offer the following opinion on housing grants. It seems to be sensible and fairer to move from a mandatory scheme for regeneration grants to a discretionary one, especially when the investment or the allocation of funding is to be maintained next year on this year. It also seems eminently sensible to give that discretion to local authorities, which will be able to co-ordinate better where the limited funding is going and direct it better to those on low incomes.
For example, in relation to the home energy efficiency scheme in part V, it seems quite absurd that under the original rules anybody over 60 years old could have received help, irrespective of their income. I am totally opposed to that concept—perhaps less so in the past few months since I became 60 myself. In all equity, we should concentrate what are limited resources where they are most needed. Those who disagree with that must answer yes or no, as they were invited to do, to the question whether they are going to increase the amount of funding.
On using right-to-buy receipts, I say to the hon. Member for Holborn and St. Pancras that of course a proportion can be used, but if all the rest are used, they will only have to be replaced through higher council tax bills, since they are presently being used to meet the interest on local authorities' debts or to reduce those debts.
I declare an interest because I am a chartered and registered architect and can therefore be considered to have a direct interest in part III. I am, however, a non-practising architect and therefore have absolutely no financial interest in part III. Indeed, I have the opposite of a financial interest, because I pay what I consider to be substantial annual subscriptions to the Royal Institute of British Architects and the Architects Registration Council of the United Kingdom. I therefore have a financial interest in reverse. My hon. Friends may say that, because I am non-practising, it is only because of vanity that I pay those extraordinary amounts of money to be able to keep the letters after my name. I therefore concede one thing to the Opposition. I am the classic personification of the saying that the more letters a person has after his name, the less he knows about the subject.
In examining part II, relating to contractual relationships in the construction industry, it is worth reminding ourselves that we are talking about one of the largest industries in our country, whether measured in output or manpower. I am told that last year the construction industry dealt with £50,000 million-worth of new orders and that approximately 1.5 million people work in what we describe and define as the construction industry. To put it another way, the industry is responsible for 8 per cent. of this country's gross domestic product.
As all hon. Members will know, the construction industry is also very diverse, with many one-man firms and very many small firms. It has been plagued by disputes, as my hon. Friend the Minister said. I am very grateful to him for leading us through in a very understandable way what is not only a five-part Bill but one that necessarily deals with complicated and complex issues. The industry is also plagued by late payments. Perhaps in more than any other industry, cash flow is vital. Late payments disrupt many contracts for that cash-flow reason alone. For too long there has been a culture of "pay when paid"—to use the phrase that the Labour Front-Bench team has used—and, indeed, "pay if paid", which is even worse.
My hon. Friend the Minister mentioned the comparison with construction in the United States and called in aid many other statistics that have been gleaned from the Latham report. Relatively speaking, the industry is inefficient, uncompetitive and adversarial. There must be a better way in which to run such a huge industry. Fairer contractual arrangements are therefore essential and overdue. Equally, since the industry is a competing and conflicting one, consensus and co-operation are vital.
I take the view that the reason why the construction industry does not have the political clout in the corridors of power that it should have is simply that it cannot speak with one voice, unlike the car manufacturing industry, the farming industry, and so on. It has to get its own act together if it is to get its deserved political influence in this House.
I am very grateful and pleased that the Government and the industry have set up the inquiry, which produced the Latham report, "Constructing The Team", two years ago. I join my hon. Friend the Minister and the hon. Member for Holborn and St. Pancras in their tributes to our erstwhile colleague Sir Michael Latham. His inquiry was most painstaking and an heroic effort considering the many previous inquiries that have been held into the industry, which did not—perhaps—have the results that we had hoped. He deserves the gratitude of us all. I am very mindful of the fact that he presented a package of measures rather than an a la carte menu from which we could pick one thing without the other. The report struck a balance between the competing interests and the disparate parts of the industry.
I must record a personal observation. I personally regret that the Bill does not deal with two of the important issues that Sir Michael identified: his recommendations on the introduction of trust funds and the need to tackle latent defects. There is a desperate need—I choose that adjective carefully—to amend the law of liability. My hon. Friend the Minister tells me that the Law Commission has looked into that. I hope that it will be able to bring forward proposals.
For example, it is quite wrong—perhaps this is special pleading—to lay on architects or designers, since not all designed buildings are designed by architects, unlimited liability. Such liability is against the interests not only of architects but of clients and other parts of the construction industry. However, I accept that there has been no consensus in the construction industry about such matters, so on balance I can understand why the Government have gone ahead with the Bill, excluding those two important points.
I accept that an essential ingredient of the Bill is the fact that, when the Government came to frame part II, they faced two particular problems. The first was alluded to by my hon. Friend the Member for Wellingborough (Sir P. Fry). What is the construction industry? Where do we draw its boundaries? There is no clear-cut division, as in so many things in life, between construction industry contracts and process engineering contracts. There is a grey area, as the debates in the other place underlined. More certainly, those who represent the process engineering industry were opposed to being included in part II.
The second problem was raised by the hon. Member for Holborn and St. Pancras. I think that he was wrong on the matter. Undoubtedly, that will come out during the debate. The concept of adjudication is distinct from that of arbitration. That was perhaps not readily appreciated when the Bill was in its early forms of presentation. It is absolutely right to say that we must find some mechanism for dealing with disputes which arise during the contract. So much time and money has been wasted. The quicker adjudication process for disputes which arise during contract is very much to be welcomed, but it cannot be final and binding, which is the final act of arbitration.

Mr. Raynsford: I refer the hon. Gentleman to clause 107. Does he concede that the way in which it is currently phrased—parties may refer a dispute for "resolution" under the procedure—makes it difficult to see how the process can be short-term adjudication rather than the binding and final arbitration which many people have been worried will be the effect of the Government's proposals?

Sir Sydney Chapman: I do not have clause 107 in front of me, but my understanding is that, if both parties to a dispute agree that the adjudication is acceptable, that is the end of the matter. Perhaps more important, if that is not enshrined in clause 107 as it is currently drafted, my reading of the debates in the other place suggests that the Government will table an amendment to make it clear beyond any doubt. That raises the point that, on a complex and complicated Bill such as this, we need all the expertise we can get and it is a matter of working in co-operation and within consensus as far as we legitimately and politically can. If I have the misfortune to be selected to serve on the Committee which considers the Bill, that will be my overriding purpose. The rapid dispute resolution or adjudication, if unacceptable to one party, must go to arbitration at practical completion of the contract.
The third problem was the need to speed up the payments system. Delaying payments has been an art form in too many construction contracts. Payments have been delayed not only from the client to the contractor or from the contractor to the sub-contractor but from sub-contractor to sub-sub-contractor. As hon. Members on both sides of the House will know, there are often many sub-sub-contractors engaged in the building process. It is a minefield at the best of times. It is eminently sensible to introduce, first, the right of payment by instalments on all but the quick and short contracts and, secondly, mandatory payment timetables. While the details can be examined in Committee, I believe that the proposed "adequate mechanism" for payment must be defined.
I join my hon. Friend the Minister in welcoming the setting up of the Construction Industry Board. Many attempts have been made to do something similar in the past. The Group of Eight was one such attempt. At a more modest level, I was engaged with others in trying to introduce a construction industry umbrella group, but for one reason or another such bodies fall by the wayside, usually because the big boys in the industry want to have everything in their control. Sadly, we can see the same phenomenon even among the professionals in the construction industry. If the Royal Institute of British Architects proposes something, the Royal Institution of Chartered Surveyors tends to demean it, or the other way round. I do not seek to make a pro-institute point one way or the other.
I am glad that my hon. Friend the Minister for Construction, Planning and Energy Efficiency is the person who has introduced the Bill. As I say, part II is very complex and relatively few people in the House have the experience of the construction industry that my hon. Friend has. Some years ago he was very much involved with the Federation of Civil Engineering Contractors.
I should like to mention a few points which relate to part III on architects' registration. I understand that I am the only architect in the House so I am perhaps an endangered species. As the Minister said, the Bill

proposes that the Architects Registration Council of the United Kingdom should be vigorously amended. It is a cumbersome body. It was created in 1931 and it is separate from the main architects' institute, the Royal Institute of British Architects. I understand that about three quarters of the. 30,000 qualified architects in the United Kingdom are members of RIBA or the equivalent Scottish or Northern Ireland body.
Most architects are self-employed or work in small practices. I do not think that my view will commend itself to all parties in the House or perhaps not even a majority of the House, but I should have preferred to see ARCUK abolished and all the regulation taken over by RIBA and its Scottish and Northern Ireland equivalents. I believe that most registered but non-chartered architects—those who are members of ARCUK but not RIBA—do not belong to RIBA because they do not want to pay the annual subscription of more than £200 a year.
If I had had my way, the problems would have been sorted out by abolishing ARCUK and transferring its responsibilities to RIBA, but forcing RIBA to take all registered architects as licentiate members of the institute, who would pay approximately the amount that they now pay to be members of ARCUK, but would not have the other rights, privileges or responsibilities of membership of RIBA. That would have been a much better way. That is, I think, what John Warne proposed in his report.
The RIBA is a prestigious professional body. It is well established. It has been in existence since 1834 and it is nationally known. It would have been the natural body for the self-regulation of architects. As hon. Members will know, self-regulation is practised by most professions in the country. I accept that the professional conduct, discipline or complaints committees of those professions have lay representatives, which is precisely what is proposed in the new set-up. I would have preferred that, but, as second best, I welcome the minimalist ARCUK, whose board is to be reduced from more than 70 members to 15, of whom only seven will be representatives of the architectural profession.
Many architects are uneasy that a majority of the 15—eight—will be lay people, representing consumer and public interest bodies. Architects have nothing to fear from that. If the seven architects are opposed to the majority of eight and cannot swing over one person, their cause may not be that strong.
It is right in this day and age that lay people should represent the consumer and public interest. Confidence is the keynote and I am sure that architects will accept that. It is certainly the trend in other professions. The General Medical Council is in the process of increasing the number of its lay members from 13 to 25, although I accept that it has 102 members. I do not know why it needs so many. Architects will lead so that other professions can follow in encouraging confidence among their clients and the public.
I mentioned John Warne's report, which got it half right. He was wrong to suggest that the protection of the word "architect" should be abolished. I disagree for the simple reason that architects do not enjoy a monopoly of building design. No one who wants to put up a building or structure has to employ the services of an architect. From a special pleading point of view, I wish that people had to, but they do not. People with no qualifications at all can call themselves building designers or even


architectural consultants. Only registered architects can call themselves architects. That is an important distinction that should be maintained because architects do not enjoy a monopoly.
I am grateful for being called. This is an omnibus Bill with five parts, 147 clauses and three schedules. I support the thrust of what the Government are doing. The Bill could not possibly deal with all matters relating to housing and nor does it seek to do so. The hon. Member for Holborn and St. Pancras was a little unfair in his comments on that. I understand that it was originally to have been included with the Housing Bill. It was right to divide them and deal with the matter in two bites. I commend it to the House.

Mr. Tony Benn: Any Member of Parliament who goes around the country will know that the dominant problems that concern people are unemployment, the crisis of people's fears about housing and homelessness, dereliction and, for many people, despair. The Bill is supposed to be about housing and regeneration but will do absolutely nothing to deal with those problems. Clauses 124 and 125 deal with grants and I shall refer to them later. Homeless people and those worried about dereliction or their jobs—some of whom may work in the construction industry—who listened to the two Conservative Members who have spoken would wonder whether the Government and their supporters were totally out of touch.
On Sunday morning, I visited a group of people who went to a site owned by Guinness by Wandsworth bridge. Yesterday, 500 people turned up there to build a sustainable village. I hope that the House will bear with me in referring to that because it relates to the Bill. The site is 13 acres and has been derelict for seven years. It has been brilliantly and appropriately renamed "Pure Genius". It consists of an old oil depot and a distillery near the riverside. Near it are flats that are supposed to sell at £190,000 that people cannot afford to buy.
The group is called "The Land is Ours" and has spent six months bringing together architects, building craftsmen, plumbers, electricians and engineers. I met an unemployed soil scientist who told me that he worked at night as a cashier in a supermarket because he could not get a job as a soil scientist. Yesterday, 500 people turned up and began building their huts, lavatories, gardens and farms. It is the anniversary—this is something that few hon. Members will remember, although I certainly do—of the great occupation that took place in 1946, when demobilised service men occupied empty sites and began building for themselves.
The key question that the House must address is simple. Do we believe that the right to a home is a basic national right? Is it in the national interest that everyone should have a home of their own? Under the Liberal Government before the first world war, Lloyd George said that the nation's health was a national interest. I remember being told that after the second world war and thinking, "It's obvious; we've got the health service." However, it is not obvious now that the nation's health is in the national interest.
The House has never accepted—and the Bill does not accept—that people have rights to homes, though anyone in their senses knows that a good home underpins family

life, protects people, provides an environment, and deals with many of the problems of law and order and crime. We must establish that the House believes, however long it takes, that everyone is entitled to a home. After the war, I remember Lord Woolton boasting that, if the Conservatives were elected, they would build 400,000 houses a year. They did pretty well in the 1951 general election on that promise.
The second question is, why is there homelessness? My hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) pointed to the negative equity figures and the number of people who were behind with their mortgages. My opinion is that homelessness is a necessary discipline of a capitalist society. If we walk along Embankment at night and see people in cardboard boxes, we think, "If I have row with my employer, get sacked, cannot keep up my mortgage and get repossessed, as 1,000 people a week are, I would be in a cardboard box." Unemployment is designed to frighten people into obedience, and homelessness is the final threat. We are sometimes told that fewer days are lost in industrial disputes than were lost under the last Labour Government. But if we take the days lost in industrial disputes and those lost through unemployment together, the figure is far, far higher than it was when Labour left office.
The whole argument about home ownership is a fraud. I go to public meetings—I did 171 last year—and I ask how many of the people there are home owners. Many people put up their hands, but when I ask how many have not got mortgages, they all put their hands down again. There are many home buyers and but few home owners. Home owners are free but home buyers who have mortgages that they cannot keep up suffer from all the fears that I have mentioned.
The country needs between 90,000 and 120,000 affordable homes a year. We have the necessary skills. There are 500,000 unemployed building workers. There are sites all over the place. In London alone, derelict sites cover an area as big as the borough of Westminster. We have the money. Do not tell us that if local authorities spent their £6 billion from the sale of council houses, they would have to raise the rates. They would get the money back. They would invest in housing and get the rents back. On that basis, it would be better for the authorities to sell off everything they own. It is time we addressed those questions.
I do not want to detain the House for long because I know that many other hon. Members want to speak. The main question is the ownership of land. I introduced a Bill 10 years ago to bring the land into common ownership. The first privatisation was the Enclosure Acts, which took common land and handed it to the large farmers. The highland clearances were the same. From the beginning of time, people in this country have had a feeling that the land belongs to them. Even Lloyd George said so. I remember his song about "the land, the land, the land on which we stand; why should we be paupers with the ballot in our hand? God gave the land for the people." In 1381, the Reverend John Ball said:
Things will not go well in England till all property is held in common".
In 1649, the Levellers said:
The land is a common treasury. It is a crime to buy and sell the land for private gain.
If we study the history of the subject, we find that the people feel that the land belongs to them.
The argument about whether it is legal to occupy an empty site that is owned by Guinness does not concern me because, under the Heresy Act 1401, it was an offence to read the Bible. It was an offence to hold many religious opinions in the House and to argue for votes for women—Emmeline Pankhurst went to prison. It was an offence not to pay the poll tax. Although the House never likes to be reminded of its history, when people do something outside, it is ignored or laughed at, but it turns up a few years later as official policy. The Government are totally out of touch with what people feel, particularly young people.
Clause 124 is the reason why I can link my speech to the Bill. It states:
The Secretary of State may, with the consent of the Treasury, give financial assistance to any person in respect of expenditure incurred in connection with activities which contribute to the regeneration or development of an area.
The activities are listed as:
securing that land and buildings are brought into effective use",
contributing to, or encouraging, economic development",
creating an attractive and safe environment
that is what is happening at the Guinness site—
preventing crime or reducing the fear of crime"—
that is what happens with that type of movement—and
providing or improving housing or social or recreational facilities, for the purpose of encouraging people to live or work in the area or benefiting people who live there".
Those are the powers that are to be given to the Secretary of State and one of the comforts is that the present Secretary of State will be off in a few months. We shall have a Labour Government and my hon. Friend the Member for Holborn and St. Pancras, who made such a powerful speech, will have those powers at his disposal. I ask him to consider seriously encouraging people who need homes to take over derelict land and build sustainable villages of their own. Hon. Members may laugh, but they have laughed at everything from suffragettes to the Chartists and trade unions. They always laugh. That is their privilege, but history never records such views to be correct.
As the Bill passes through its various stages in the House, I hope that people throughout the country will follow the example of what is being done in London. Some of the people at the site came from Newbury and others have been involved in other campaigns. My message is: "If you want to bring pressure to bear on a Government, you mustn't wait for the legislation that you need, you must do it yourself." With fairly sympathetic media—something that has given me some pleasure and caused me some surprise in the past few days—people will realise that, if they want to end unemployment, homelessness, dereliction and despair, the best thing is to do it themselves and see how others will follow.

Mr. Peter Thurnham: First, I congratulate my hon. Friend the Minister for Construction, Planning and Energy Efficiency on the enormous amount of work that he has done on the Bill. It is a great credit to him, and without his massive personal commitment it might not have come about. His sincere

belief in the need to improve practices in the industry was evident in his speech. He made it clear that, without good contractual practices, there will not be any good subcontractors and, without them, efficiency gains in the industry, which are only too necessary, will not be possible.
My hon. Friend the Minister mentioned the work done by his staff. I can certainly endorse that. When I was Parliamentary Private Secretary to the Secretary of State for the Environment in 1992–93, the Department was concerned to do all that it could to improve matters in the construction industry. I am aware of the great input of staff in the Department; great credit is due to them.
This Bill is extremely important. Part II will affect the livelihood of many hundreds of thousands of people in the construction industry. Indeed, I should declare an interest, as it will affect me as a professional engineer. We just heard an excellent speech from the Member for Chipping Barnet (Sir S. Chapman), who declared a negative interest, I think—I am not sure how many people cease to practise as architects. I once heard a definition of an architect as someone whom one never employs twice, but perhaps it would be unfair to apply that too broadly. His speech illustrated the importance of having hon. Members in the House with a broad background, who can bring experience of an industry and speak as well as he did.
The Bill will also affect the 2,000 members of the Electrical Contractors Association, which I have been proud to represent for most of my 13 years in Parliament. The new Register of Members' Interests is published this afternoon. I believe that the House is much the better for having many hon. Members with a diverse range of interests and experience of the real world of work before they come here. We should certainly avoid encouraging a Parliament full of career politicians, who demand higher and higher salaries for Members. It is far better to have hon. Members who are not solely dependent on parliamentary salaries and have a wide range of interests in the world outside. I was nearly turned down as a foster father because the social services thought that my parliamentary income was far too insecure. I was passed as fit only because I was a professional engineer with another income.
It is only right that trade associations should be properly and openly represented in Parliament. The Electrical Contractors Association is, I am glad to say, one of the strongest associations in the country, with a record of representing the best interests of the specialist construction industry as a whole. For instance, the electrical contractors' training and apprenticeship schemes are acknowledged to be the best in the country, bar none.
Much consultation has taken place and, as the Minister said, great credit is due to Sir Michael Latham, whom the Department of the Environment so wisely chose to head the team and whose report is the foundation for the Bill. Sir Michael achieved a great deal more than many people thought possible. We are all indebted to him because the industry plays such an important part in the economy, representing nearly 10 per cent. of gross national output. If a 30 per cent. improvement in efficiency were possible, it would give a 3 per cent. boost to that output.
The ECA, with some 2,000 member firms and 50,000 employees, is a major constituent of the Constructors Liaison Group, which represents specialist sub-contractors


in the construction industry. The CLG welcomes the main provisions of part II of the Bill so far as they embrace the recommendations of the Latham report, but wants the Government to go further than the changes already suggested during the Bill's progress in another place.
First, on the definition of the industry and the question of scope in part II, the process industries should be included. I am a little uncertain why they are not, but perhaps the Government lack confidence in the Bill. It is a good Bill and, therefore, the more of the industry that it embraces the better. We should not hang back. The work that specialist subcontractors do in the process industries is just the same as the work that they do in the rest of the construction industry. It is fair to say that there is a difference with the process industries, in that they are not speculative as some building is—the process industries do not put up towers like Canary Wharf—so that sector of the industry is rather more secure and stable. That does not mean to say, however, that it is a utopia for sub-contractors.
I hope that my hon. Friend the Minister will think again about extending the scope of the Bill so that sub-contractors are in no doubt that the work that they do for process industry contractors will be embraced in the same way as the Bill embraces their work elsewhere. As things stand, sub-contractors face the same sort of free for all when working in the process industry as they do elsewhere in the construction industry. It is important, therefore, to include the process industries fully in the Bill.
Off-site work and steel work should be included in the Bill. Modern processes, which often lead to more work being done off site, should not for some strange reason be excluded from the excellent provisions of the Bill.
Maintenance and repair, which according to the Department's own definition account for more than 50 per cent. of the industry's output, should also be included. It is currently unclear whether it is included. Perhaps the Minister will clarify in his reply whether maintenance repair is included and will also deal with the issue of design.
Adjudication, which arises under clause 107, has already been mentioned. I am certainly pleased with the way in which the Minister has taken account of the representations made in the other place, and I believe that we are now getting nearer to a workable definition. It is still important that we have tighter definitions so that we can be absolutely clear about how the adjudication process will work and can avoid confusion over arbitration. The Government are well aware of the strength of the points made by Lord Ackner when he spoke very well on that matter in the other place, stressing the rubric of "pay now, argue later" as the basis for adjudication rather than arbitration. It is very important that we have a completely clear distinction on that point.
I accept the Minister's argument that the draft scheme is much better kept as a statutory instrument and that the Government will have time to consult more fully on it in the autumn after the Bill becomes law. I was a bit concerned when the hon. Member for Holborn and St. Pancras (Mr. Dobson) said that he would do all that he could to stop the Bill. I am not sure whether he was referring to the entire Bill or only to parts of it, but I certainly look forward to seeing it on the statute book. I hope that Opposition Members will confine their

opposition to certain parts of the Bill and will not try to stop it completely. The excellent measures that it proposes will be welcomed and should become law sooner rather than later. I hope that the Opposition will understand that point.
It is essential that the Government get the draft scheme right. Therefore, they should consult fully and properly on it. As a statutory instrument, it will be open to amendment at a later date more easily than if it were part of the Bill.
The payment issue is causing the most concern to sub-contractors because it is the key to survival for small firms; it is life or death for them. For large firms, it may not matter very much whether an adjudication, arbitration or legal action goes one way or the other. It may be uncomfortable if large firms lose an action, but they will survive it, whereas it is a matter of absolute survival for small firms. It is therefore essential that the definitions are very clear.
We are confused about clause 108. We do not see why 60 days should come into the matter. The CLG would like subsection (1) to be deleted. It cannot see any sense in having a 60-day threshold in the first place. I have never heard of such a thing, and would be happy for it to be 30 days—which is the normal arrangement. There seems to be no need for that subsection at all.
Clauses 109 and 110 require much better definition to ensure that they work properly. As I said, it is absolutely vital for small firms to know that the provisions will work properly. It would be a disaster if the Bill reached the statute book and enabled clever lawyers employed by large firms to outwit small firms because of provisions that had not been properly thought through. Amendments have been proposed by the CLG. The Government are aware of the amendments, and I hope that they will feel able to introduce them as Government amendments in Committee.
It is essential that payment mechanisms are properly developed and provisions on debt are clearly established. It is not clear from the Bill exactly when a debt would become a debt and how the payment mechanism would work.
Clause 112 covers the ignominious practice of "pay when paid". That practice has existed for some years, but it has recently become more prevalent. Once it starts in an industry, it spreads right through because each person feels that he must pass on the practice to the next person in the chain, so that the whole industry becomes riddled with it. It is perhaps the most important clause in the Bill, as long as it works properly.
It is again felt that better definitions are needed, as there may be ways in which some people may be able to avoid the Bill's provisions. It is essential that that bad practice is eliminated from the industry, and it is much to the Government's credit that they are introducing the Bill so that this, of all the worst practices, will be eliminated. It will do more than anything else to improve sub-contractors' sense of security. They need the certainty of cash flow to be able to pay their wages.
I am uncertain where the Government stand on the question of trust funds, which formed a very important part of Sir Michael Latham's recommendations. If I remember rightly, he said that he did not want his recommendations cherry-picked, and that they should be taken on board as a whole. I hope that the Government


will feel able to consider including trust funds and that, if amendments are tabled in Committee, the Government will feel able to consider them positively—or, ideally, to table their own amendments to make trust funds a reality.
Trust funds would deal with the whole problem of pay when paid because, if the money is there, it can flow through and the fear of insolvency does not need to arise.
I have confined my remarks principally to part II of the Bill, with which I have been most concerned, but all the Bill's provisions are important. I am interested in the provisions on disabled facilities grants. I noticed that many of the Bill's measures have been widely welcomed, but I know from my experience that there is a need to improve some procedures, certainly in relation to assessment.
A year or two ago, I was asked to help a constituent of mine who had been turned down for a shower seat because he lacked sufficient priority. When I went to see him, I found that he was a double-amputee. He had no legs, but he was considered to be an insufficient priority to have a shower seat. He was still registered by social services as having one leg. That is one example of how assessment procedures can be way behind what they should be. It is essential that we improve the way in which people are assessed and the speed with which it is done.
I do not know whether the Government will be able to re-examine the problem of part M building regulations applying to new homes. I understand that it would cost about only £200 to £300 for the regulations to apply to each new house, which seems to be an affordable figure. It is, of course, much less than the cost of altering a house at a later date.
I do not know whether there will be an opportunity for me to serve on the Committee, but I certainly wish the Bill well in its progress through Committee. I look forward to it coming back to the House on Report and Third Reading.

Mrs. Diana Maddock: Housing is a key element of our infrastructure because for the majority of families their house is the single biggest purchase they will make in their lives. Between us, we spend more than £30 billion a year on housing in the United Kingdom, and 30 per cent. of our total wealth is in housing. As hon. Members have already said in this debate, decent homes are the anchor for successful families and successful individuals.
Housing is a part of the construction industry, which is a key element in our national economy. In 1995, construction output was worth £52.5 billion or 8.5 per cent. of our gross domestic product. That is why this Bill is so important, and why the Housing Bill which had its Third Reading last week is also so important. I fear, however, that both pieces of legislation suffer from the same problem, because many of the issues that the Government claim to be dealing with will not be solved by changing priorities or by moving the goalposts. They will primarily be solved by increasing investment and enabling long-term financial planning. For that, we need an improvement in financial confidence—in fact, we need that elusive feel-good factor about which we hear so much.
Part I of the Bill deals with grants and needs to be considered against the condition of existing housing. The last major review of the state of our housing was the English house conditions survey conducted in 1991 and published two years later. The survey showed that at that time almost 1.5 million dwellings in England were unfit and that well over 1 million more were in need of substantial repair. That describes the condition of 2.6 million properties, or more than 13 per cent. of the housing stock in England. About 5 million people are currently living in those properties, three quarters of them in the private sector.
Local authorities and housing associations have generally achieved a steady improvement in the condition of their properties, but most reported a deterioration in the condition of private sector properties. If anything, the situation appears to have got worse since 1991. Many local authorities submitted reports for last year's annual survey conducted by the National Home Improvement Council. Councils had found higher levels of unfitness than they had expected from their interpretation of the 1991 survey.
The NHIC said that rural local authorities in particular have found that the situation had got very much worse. In fact, some rural local authorities found levels of unfitness in homes that were twice as high as indicated in the 1991 house conditions survey. The NH1C survey highlighted a number of concerns, one of which related to homes in multiple occupation. Some local authorities reported that 80 per cent. to 90 per cent of houses in multiple occupation in their areas were unfit. In fact, the private rented sector in general was found by a majority of authorities to be deteriorating badly. That is very bad news, because the Housing Bill that we debated only last week will place more people in that sector.
As might be expected, very high levels of unfitness and disrepair were found in homes built before the first world war, but what concerned many authorities is the indication of a very sharp decline in the standard of inter-war property. A number of authorities told the NHIC that many people did not seem to be aware of how bad a state their properties were in. That was especially true of elderly people, people on low incomes and people living in rural areas. One council reported that more than four fifths of people living in unfit homes had said that they thought that their living conditions were generally satisfactory, and that was despite the fact that there were clear signs that their health was probably suffering as a result of the condition of their dwelling. That is very depressing.
Even when people apply for home improvement grants, they have to wait a long time. The NHIC survey found that the average wait was three years but that in some areas people were having to wait 15 years for a grant. As for discretionary grants, most councils said they were able to provide them only for very restricted purposes and on very restricted budgets. Some authorities ran out of money in June, only three months into the financial year.
Many bodies, including the NHIC, were critical of the Government's White Paper, and I shall read out one or two of the comments that have been made. The Chartered Institute of Housing said that, despite regular surveys of the housing stock, no assessment is made of the resource input needed to deal with the backlog of disrepair revealed. The Association of District Councils and the Association of Metropolitan Authorities felt that the


White Paper was narrow in that it failed to attempt any strategic assessment of the repair needs of the sector. Even the Council of Mortgage Lenders said:
This consultation paper signals a further reduction in the public resources made available to assist the repair and maintenance of private properties even though there is known to be a significant unmet demand.
There is therefore a widespread opinion that the Government are not tackling the real problem.
I represent a constituency that contains very many elderly people. I was therefore especially worried by the points made to me and, I am sure, to other hon. Members, by Age Concern. Age Concern is disappointed that the Government do not intend to extend part M of the building regulations. It is also concerned about the removal of the right to mandatory grants because it believes that that could lead to older people living in unfit housing for long periods.
The harmful effects of poor housing are well documented. Dampness leads to bronchial and respiratory illnesses; cold homes lead to hypothermia and increased susceptibility to other illnesses; and unsafe housing can lead to accidents and death. Various estimates have been made of how much we spend treating people suffering from the effects of cold and damp housing. One estimate is £800,000 but another is well over £1 billion.
Age Concern recognises that local authorities are not meeting their duty to award even mandatory grants, but it does not believe that scrapping them is the answer. Like other bodies, it wants a clear national strategy and adequate resources to tackle the problem of unfit housing. Age Concern and other bodies are also worried about grants for the disabled. Age concern is especially worried as 71 per cent. of such grants are given to people aged 60 or over.
Although grants for disabled people will remain mandatory, local authorities will be able to defer payment for up to 12 months. If people need the grant when it is approved but do not get it then, they may not be able to stay in their own homes, and it may well cost the state more to provide care for them elsewhere. As the hon. Member for Bolton, North-East (Mr. Thurnham) said, waiting for assessment is another problem.
Everyone agrees that there is a lack of occupational therapists. There have been various suggestions about how we might deal with the problem. When the matter was discussed in another place, the possibility that general practitioners might be used in some cases was considered. The case of the double amputee who needed a seat in his shower, cited by the hon. Member for Bolton, North-East, illustrates the problem. I hope the Minister will listen in Committee to the concerns that have been expressed and try to do something about them, because the system is not working terribly well at the moment.

Mr. Robert B. Jones: I have been listening carefully to the hon. Lady and I did not want to interrupt her flow. I guarantee that we shall consider all the issues that have been raised, but I must correct something that she said. She said that we had decided not to extend part M of the regulations. In fact, we are still analysing the huge response to the consultation and we shall make a decision when we have finished.

Mrs. Maddock: I am grateful for that information about part M. My perception, and that of others, is that

this has been going on for a long time. The Bill provided an opportunity to solve the problem, but that has not been done. However, I welcome the Minister's comments and look forward to the Government's decision.
I recognise that the Government have listened to some of the concerns expressed and made some changes to the Bill in another place. One change related to the length of time that someone has to be living in a house to get a grant. The matter is still controversial—one has to have been living in a house for three years before becoming eligible. Baroness Hamwee said in another place that that can be a disincentive and that there should be more discretion for local authorities to decide these matters. I know that the Minister has provided further discretion and that in some cases the local authority can waive the qualifying period. However, basically the situation remains the same. Grants should be an incentive to improve and to repair properties—there should not be hurdles to prevent people from doing that.
I welcome the fact that disabled people who live in park homes will now be eligible for grants. The Minister knows that I share his interest in people who live in park homes, and he very kindly included them in the Home Energy Conservation Act 1995, which I piloted through the House. For too long, owners of mobile homes have been treated as second-class home owners. I have an enormous number of such people in my constituency, many of whom are elderly and on fixed incomes and have been unable to apply for disabled facilities. This provision is long overdue. I may be ruled out of order for saying this, but I would like the Minister to commit himself to reforming the whole of the mobile homes legislation, although perhaps that is for another day.
Part II of the Bill aims to provide fairer contractual arrangements. Many hon. Members have spoken at great length on this and I join them in paying tribute to Sir Michael Latham. He has done a tremendous job. However, one or two problems still remain, some of which have been highlighted today. The construction industry needs a hand. For example, since June 1991, construction workers have lost their jobs in the south-east and East Anglia. If those people were back at work, the Exchequer would be £729 million better off in social security payments and taxes and this would save up to half the cost of building. The Trades Union Congress has suggested that every new construction job creates two more jobs elsewhere in the local economy, which is why it is so important. Even if that were only half true, the money spent on building would be recouped almost immediately.
We are told that the economy is growing—indeed, some Ministers believe that it is booming—but construction is per cent. below its 1990 peak level. Unemployment in the construction sector is 12.2. per cent., against a national average of 8.5 per cent. It is estimated that, in the first half of this year, 20,000 jobs will have gone in the construction industry.
The output graph from the industry shows a series of peaks and troughs over recent years. It is vital that we have economic stability and regulations which help rather than hinder the industry. Completions have been dropping since 1988. Unfortunately, negative equity and job insecurity do not allow the market to benefit from lower prices and interest rates. If we add to this Government cuts in housing, in road construction and in health, we can see that the problems are getting worse.
The Bill will not address the underlying problems. However, we welcome some aspects of the Bill, particularly when it comes to Latham. I remember being a councillor and looking at competitive tendering. I was concerned that we were discouraged from taking quality into account when we looked at tenders—and in some cases we were actually not allowed to take it into account. The resolution of disputes will be examined.
I welcome the fact that there is more emphasis on research and development and on raising standards and skills. That is particularly important in relation to energy conservation. We have heard a lot of this before, but what guarantee do we have that it will happen? We already know that measures to clarify liabilities for building defects have been dropped. This afternoon we have heard that that issue has been referred to the Law Commission.
With regard to payment of debts, we all know that small businesses, in particular, need regular payments to keep their cash flows healthy. I am surprised that I am the first to mention the confusion about where the Government stand on this issue. The Deputy Prime Minister claimed that he improved his cash flow tremendously at the expense of small businesses, but the Economic Secretary took an opposite view. There are still matters in the Bill that need to be resolved and many bodies are still concerned about this.
There is a new right for parties to a contract to refer disputes about payments to an independent adjudicator. However, the way in which the adjudication scheme will work remains a mystery and will be revealed after consultation. I know that several bodies are still concerned about one or two aspects of this. Like other hon. Members, I have received correspondence from the Institute of Civil Engineers, which feels that the Government are confused about what is arbitration and what is adjudication. It is also concerned about suspension of contracts and performance. I am sure that those matters will be raised in the Standing Committee. It is obvious that there are still problems, despite going a long way towards implementing Latham.
Part III of the Bill relates to the registration of architects. It is remarkable that the Government have changed their mind at least twice on this issue. However, we have had good input from Conservative Members on this. It is essential that a registration scheme should cover the full range of practising architects.
Part IV refers to regeneration. The Government claim that they are giving local authorities wider powers to deal with regeneration schemes, but resources continue to dwindle. Who is running local government? There are no longer many councils run by the Conservatives, but we know where they are going to put the blame, despite the fact that much of the money will come from central Government. It is a good thing that local authorities can give relocation grants in clearance areas, but where are the resources to come from? Once again, the guidance notes are yet to be issued by the Secretary of State.
Part V deals with miscellaneous and general provisions. I was surprised that the Minister did not mention the home energy efficiency scheme in his opening speech. I know that the Minister is interested in this scheme and I am grateful to him for his help with the Home Energy Conservation Act that I steered through the House last

year. If it were not for his commitment, I am sure that that Act would not be on the statute book now—and I do not detract from that.
However, the Minister must be acutely embarrassed by what happened in the Budget last year when it came to spending on the home energy efficiency scheme: one third of the budget was cut. When one looks at how much that is in terms of the amount that the Government spend, one sees that it was extremely mean, and it has been met with anger and astonishment by every group involved in energy efficiency, the elderly and other people suffering from fuel poverty.
Pensioners are more likely than any other households to own inefficient, old and poorly maintained heating appliances, and to use expensive fuels such as on-peak electricity and solid fuel fires. Forty per cent. of households headed by a person who is aged over 75 live in energy-inefficient homes. When I read the NHIC survey results I was surprised—perhaps I should not have been—to see that quite a few authorities are providing grants to help householders with energy conservation work on their homes, despite the availability of the HEES grants. The justification was the selectiveness and limited nature of HEES grants, a problem that will only get worse as a result of the cuts introduced by the Government last year and some of the new regulations introduced by the Bill.
I hope that the Minister will give hon. Members some indication as to where he stands on this issue. I know that he is a strong supporter of energy efficiency. I hope that he can lean rather more heavily on the Government. I hope that the Minister will be able to be constructive in Committee. I concur strongly with the comments made by the hon. Member for Chipping Barnet (Sir S. Chapman) about what a Committee can do for a Bill and the constructive way in which people work. I know the Minister will have as his aides Ministers who worked with me and others on previous housing legislation, which we improved.
The construction industry badly needs our support. We must deal with the backlog of repair and unfitness in our housing stock. Every time I talk about housing in the House, I talk about the sorts of policies that the Liberal Democrats would like to see. We believe that councils should be allowed to spend their capital receipts and that they should have the freedom to act on and solve the problems of bad housing in their areas.
We would like the way in which the public sector borrowing requirement is calculated to be reformed because we need to distinguish between capital and revenue. We need to ensure that we can show in the accounts that investment in long-term infrastructure is a good thing. The Chartered Institute of Housing has considered that requirement in some detail and conferred with other financial institutions about it. They have concluded that, if such changes were made, more money would be available to spend on housing and on infrastructure.
We need to do more than the Bill, which merely moves the goalposts. We need a clear national strategy, backed with adequate resources, to tackle the problems of unfit housing. Above all, we need to give another impetus to the construction industry, which so badly needs our support.

Mr. Den Dover: It is a real pleasure to speak in a debate opened by my hon. Friend the Minister for Construction, Planning and Energy Efficiency, who has such invaluable and detailed knowledge of the subject. I pay tribute to his experience, which was revealed not least by his response in the past few days to the requirements of the construction industry, which revealed that he has a proper idea of what it requires.
I support what my neighbour and hon. Friend the Member for Bolton, North-East (Mr. Thurnham) said about mandatory disabled grants, which are not properly assessed. A lot of work needs to be done by local authorities to ensure that council officers assess a person's case independently and fairly to identify the need and how quickly provision should be made available. After all, the handicapped and the disabled need every help that we can possibly give them. It is right and proper that the disabled, whose need is urgent, will get a larger share of the grant available under the Bill and I welcome that.
My hon. Friend the Member for Chipping Barnet (Sir S. Chapman) spoke about the Architects Registration Council. It is a good thing that the Government did not allow it to be abolished two or three years ago. I welcome the fact that, since then, the council's activities have been freshened up and greatly improved. The introduction of an independent or lay person on the board of that council is especially welcome because architects work in the real world and they serve an array of building clients from the public and private sectors. It is therefore right and proper that those clients—the lay members—should be represented on the Architects Registration Council. That move is long overdue. The Bill will address the problem caused by the fact that there are far too many professional members of that council.
Hon. Members have already said that the relocation grants that will be available to many of our constituents are an excellent prospect. Far too often, people have had to move out from the towns and cities where they wanted to stay, where there were schools for their children and where they played a full part in their community. It is right that they should be given assistance to ensure that they can stay in their towns and continue to play a part in their community. It is also right that that money should be targeted at that objective.
The streamlining of the legislation relating to the single regeneration budget is welcome. Many items of Government legislation relate to that budget and those responsible for it have a mammoth task in deciding between competing schemes up and down the country. However, far too little money and resources are available to tackle the problems of dereliction. The only way that they will be provided is to ensure that we get value for money.
I am therefore all in favour of urban challenges comprising groups, particularly those involving the private and public sectors, which put forward their best ideas for the money on offer. Such partnerships will offer the best value for money and ensure that the problems of dereliction are well and truly overcome. I therefore welcome the forward-thinking, positive ideas in the Bill.
A number of hon. Members have rightly spoken in favour of the home energy efficiency scheme. The number of pensioners in my constituency who have benefited from that scheme over the years is unbelievable. The money invested gives a tremendous return by reducing

heating bills straight away. In the past, that scheme has involved loft insulation as well as the draught-proofing of doors and windows. It has been an absolutely marvellous use of public money because it has enhanced people's quality of life as well as reduced their heating bills. Its operation has ensured that we have targeted resources onto to those most in need. That scheme also generated labour-intensive activities in the construction industry at a difficult time when work was scarce.
Some adverse comment has been made about the activities of residuary bodies. I have always found them to be responsive. I admit that they are not elected, but they have done a marvellous job in collecting assets of all kinds and using them, selling them off or off-loading them. Okay, we have heard about the sale of county hall in London, but at least that site has been put to use earlier than was expected and money has been generated from the sale of flats. I pay tribute to the London residuary body.
There is an urgent need for such a residuary body to take over the work of the urban development corporations and the Commission for the New Towns when they wind down. I was a prime mover in getting the UDCs set up, and I pay tribute to their marvellous work. They have had unique powers because they have been able to buy and amass land and give themselves planning permission. They have transformed the centres of Manchester, Leeds and Newcastle, and even Trafford Park, which is outside Manchester. They have brought jobs to those areas, improved the housing stock and the general infrastructure. I have nothing but praise for their activities. In terms of public sector spending, however, everything should have a limited life. When those bodies were set up, it was always assumed that they would be wound up after five or eight years when they had fulfilled their job.
It is right that the Commission for the New Towns and the UDCs should be wound down in the next few years and it is necessary that there be a body charged with the task of off-loading those organisations' assets. After all, those organisations held land when it was easy to dispose of it, unlike now, and certainly not at the high boom prices of the past. I have every confidence that any residuary body or bodies set up to take over the huge job of the UDCs and the Commission for the New Towns will do it well on behalf of the Government.
Part II is the backbone of the Bill, and rightly so. I should like to add my compliments to the tributes paid to Sir Michael Latham. He has done a super job in the past few years, as he did as a Member of Parliament for many years, to make sure that the voice of the construction industry is heard. He has managed that because of his wealth of experience, which he has in spades.
Sir Michael's report concentrated on trust and team work, of which there has been far too little in the construction industry. That lack has been disastrous, because the construction industry has an extremely bad reputation. I am not surprised that we must sharpen our act to catch up with countries in the far east, the middle east, the Americas and Europe. I am not convinced, however, that 30 per cent. cost savings are possible. I am sure that that estimate took into account the enormous legal bills that would be saved because of less and less litigation—an undoubted effect of the Bill. In future, we need to ensure that the client is confident that he will get what he wanted, at a reasonable cost and in reasonable time.
When I was chief executive of the National Building Agency—a Government quango—25 to 28 years ago, we were often brought in to sort out public building projects, such as huge hospital projects, that were running over on time by two or three times the construction period and running over two or three times on budget. Admittedly, that was a time of high inflation, but the construction industry would simply wind up and grind down to zero work load if it carried on like that.
Even in today's climate, some building contractors are famed for their use of claims. On any site, if a building contractor has a proper estimate and performs well, he will hit the target date for completion and come within budget. Many contractors are disorganised and inefficient, and expect to milk the client afterwards by using their claims department to make enormous claims that bear no relationship to the clauses of the contract, which do allow extensions of time for weather and all sorts of things, some with costs and some without costs. They make such claims and expect to obtain that money as of right.
The legal profession has fed very well on that system for many years. What I admire about Sir Michael Latham is the fact that he is cutting through all that and calling time on a process that should have disappeared years ago. It will mean a greater work load in the industry, more trust and more team work. The industry will have a better reputation and our export opportunities throughout the world will be enhanced. We have some of the best building and civil engineering firms in this country. They are in export markets and do extremely well, but they will do better if they are able to abide by the rules set out in the Bill.
I shall now discuss those rules. I mentioned to the Minister the possibility that the process engineering industry should be in the scope of the Bill. Perhaps he would give it one last thought before he keeps it out. I admire the fact that there has been a very small amount of litigation—that is superb. Why change something that is a success? It might have some rationale if most, if not all, construction contracts fell into the ambit of the Bill. Then there would be no uncertainty.
I share the misgivings of my hon. Friend the Member for Wyre Forest (Mr. Coombs) about the adjudication process. He asked a valid question, to which I hope that the Minister will give further thought—who decides whether the adjudication terms and payment terms in the contract drawn up between employer and contractor are reasonable and adequate? That is a very important matter. If I, as a building client, want to start work and am ready to sign the contract, but someone empowered to do so jumps in and says, "Sorry; I do not think that the adjudication and payment terms are adequate," I might easily have a delay, as soon as the legal profession comes in, of two or three months without even trying.
On the needs of the industry, I was delighted to have put into my hands today a superb letter, dated 2 May, from the Minister to Sir Michael Latham, which came to me through the hands of the Construction Industry Council. I wish that it had been made available to hon. Members on both sides of the House, because Opposition Members are working under the misapprehension that several of the items mentioned in it have not been addressed. I shall briefly skim through some of those.
First, the professions in the industry—especially those whose members might act as adjudicators—do not take kindly to the thought that they may have to try to obtain professional indemnity insurance if they act as adjudicators. A sentence on the final page of the letter gives them tremendous comfort. It says:
we have provided adjudicators with protection against liability for their decisions so long as they act in good faith. The point made to the Government was that it might be difficult to recruit adjudicators without that provision. We agree.
I agree entirely. Adjudicators will play a key role in the workings of the Bill, and they need to act in good faith, in their professional capacity. It is essential that they do not feel that the ground will be cut from under them, that they have no professional indemnity insurance and that they might have all their assets called in. If they do not have those fears, they will be able to do their best.
Debate has been played out about the period for adjudication and about whether the findings of the adjudicator are binding. The various organisations in the industry have said, "We need a reasonable time for the adjudicator to reach a decision"—perhaps the period in the original scheme was too short—"and we do not want his decisions to be final and binding."
I shall quote again from the letter at some length, because the matter is very important:
The adjudication mechanism described in the Scheme included a provision for adjudicators to make binding decisions (on the principle that it might be helpful to get small disputes resolved once and for all); it also enabled parties to agree at the outset that a dispute could be reopened after practical completion of a contract for final resolution in arbitration or before the Courts.
I recognise that the adjudication procedure which we put forward in the draft Scheme has caused some concern in the industry not least because it was feared that it might not achieve the objective of securing a rapid resolution of disputes. We have now made it clear that the statutory consultation on the Scheme will be on the basis that adjudication will require parties to abide by an adjudicator's decision during the period of a contract but that either party would be able to reopen the dispute thereafter, so long as a proper notification has been given within a set period.
I hope that Opposition Members fully accept that that settles their misgivings. If they have do not have a copy of that letter, I hope that they will get it in the next few minutes or so.

Mr. Raynsford: I am grateful to the hon. Gentleman. He will of course understand that all these misgivings and anxieties would not have occurred in the first place if the scheme, as originally proposed by the Government, had not given rise to considerable doubts and concerns. There remain problems, such as the one that I have highlighted in the wording of clause 107, which will need to be considered very carefully to ensure that we have a workable scheme that is acceptable to the whole industry. That must be the objective.

Mr. Dover: I agree wholeheartedly with the hon. Gentleman. We now have the statutory consultation process, which will be carried on after Royal Assent. I pressed the Minister on that earlier.

Mr. Robert B. Jones: Throughout, the problem has been that the construction industry was prepared to sign up to general propositions but we could not flush out the detail. It required the draft scheme to focus the minds of those in the industry on what they wanted and did not


want, and it has enabled us to end up with something broadly acceptable. There may still be points that we need to resolve and we are perfectly willing to continue discussion with the industry and outside to try to do so if at all possible.

Mr. Dover: The industry has pondered long and hard about detailed wording. I am a civil engineer by profession, and the wording that the Institution of Civil Engineers sent to the Minister in the past seven days will need to be very carefully examined; I think that it is perfect. The institution also has a very good idea on the payment provisions, which I shall discuss later.
It is in the interests of all parties in the House, the construction industry and the nation to ensure that we get the right legal framework. If we have to take another few weeks or months—even after Royal Assent—so be it. At least there will be a consultation process. I very much welcome the Minister's statement earlier that we shall be able to debate those regulations in the House. That will give us a first-class opportunity to ensure, with some hindsight, that the thing is properly worked out in detail, which is extremely important.
The usual standard contracts used between client and contractor contain full payment conditions, specifying payment periods, but the Bill concentrates on special contracts between, say, the main contractor and his subcontractors. They are sometimes swingeing and very unfair. Sub-contractors fall into all sorts of financial traps, and they often have to stay on the job and see the contract out even though they are not being paid. I welcome the fact that the Bill addresses insolvency and that there will be a fair payments system and a test which presumably people must comply with from the start. Payments must be made properly at the right intervals.
I would like to suggest one amendment proposed by the Institution of Civil Engineers: that the word "valid" be inserted before the word "ground" in clauses 2110(a) and 110(b). The institution suggests that companies who withdraw their effort from a site because of non-payment must notify the adjudicator named and agreed under the contract of their decision, giving valid reasons for withdrawing their labour. In other words, a firm cannot say, "I am a sub-contractor on the job, but I am not happy so I shall withdraw my labour," without valid grounds. I hope that the Minister will consider allowing the adjudicator to make a pronouncement and determine whether valid grounds should taken into consideration when drawing up contracts.
In conclusion, the Bill represents a major step forward for the industry. I appreciate not only the craft and the care that has gone into the Bill's preparation, arising out of Sir Michael Latham's report, but the tremendous number of hours and days of discussion of it in the House of Lords. It is unusual for major legislation to come to the House following consideration in the other place. The House of Lords has done much to carve out the right form of words in part II of the Bill and I hope that the Standing Committee will examine it even more carefully. The Bill contains many good ideas and it will be a tragedy if Opposition Members seek to divide the House on a measure that is useful to the entire construction industry. I support all its provisions.

Ms Joan Walley: It is important to recognise that the Bill could well be important for the construction industry, and I am sure that there was a great deal of technical consultation before its presentation. I hope that the legislation will also advantage manufacturers in my constituency who make bricks and who are involved in the sanitary and tableware industries.
My principal concern—which is relevant to how Opposition Members will vote this evening—is whether the Bill addresses the unmet housing need in constituencies across the country. I represent many people who urgently need housing of one kind or another, and my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) made it clear earlier that the Bill does not address that existing need.
We have heard much tonight about the single regeneration budget—the SRB—and how it will benefit those who live in houses that are in need of attention. Although the Government have allocated some resources to the SRB—I refer to the Cobridge SRB in my constituency—that is no substitute for regular maintenance and proper mandatory grants. That funding is necessary in a constituency such as mine where about 7,000 people are owner occupiers and a large proportion of them—63 per cent.—are elderly.
As we move towards the new millennium, we must put on the statute book basic standards for new-build houses. We must address issues such as home safety, energy efficiency, environmental sustainability and housing for the generations. Earlier today, the Government informed us that we must expect to pay for our care in old age—although we thought that our national insurance contributions would meet that cost. It is significant that the Government have said nothing about care in the community. The fact that, as we approach the new millennium, we cannot apply design standards to new-build houses in order to make them fit for habitation by future generations says a lot about the Government's failure to address the country's housing crisis.
That failure is my main concern: the Government cannot get their housing policy right. We are debating the Bill this evening because the Local Government and Housing Act 1989 has failed. It came into effect in July 1990 and it should have provided mandatory grants to those who needed them. Earlier today, my hon. Friend spelled out some basic housing regulations. Many people do not have indoor WCs or wind and watertight roofs over their heads. Is it asking too much for those people to be entitled to mandatory grants?
With the exception of provision for the disabled, the Government have insisted upon moving away from providing decent housing and mandatory grants. I am very alarmed about the direction in which the Government are heading. Many Labour-controlled councils around the country desperately want to help those who need mandatory grants, but they are not able to do so because the Government have not provided the funding. The Government are aware of that problem, but they refuse to allow local councils to award mandatory grants. That is a telling point.
I shall refer briefly to my constituency and to the city of Stoke-on-Trent which I and my hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson)


represent. The Minister kindly visited north Staffordshire recently to see the housing problems at first hand. Following that visit, we were grateful to receive an extra allocation of £, which was made available to deal with housing problems in Stoke-on-Trent. That funding is very helpful, but it does not go far enough.
Stoke-on-Trent city council needs £10 million simply to satisfy the number of outstanding mandatory grants and to meet the needs of 1,000 people who are on the waiting list and who require sums ranging from £1,000 to £20,000. That gives some idea of the extent of the housing problem in my constituency. By terminating the mandatory grants system, the Government have caused a tremor throughout my constituency which is equal to that felt in Burslem when there was an earthquake registering 2.7 on the Richter scale. We are facing a housing crisis, and the removal of mandatory grants will condemn many of my constituents to living in damp and in squalor—the sort of housing that should have vanished with the 19 th century.
For the legislation to deal effectively with housing problems in my constituency, it should include several important provisions. I refer to the situation facing about 33 so-called "ineligible owners" who live on the Galleys Bank estate in Kidsgrove in my constituency. Those people purchased properties, which they later discovered were built using the Schindler construction method, after the cut-off date of 26 April 1984. They did not know then that the properties were defective under housing defects legislation.
I have raised the issue with the Government. It is outrageous that 33 owner-occupiers are unable to find a solution to their problem. It is not simply a matter of liability, as the Minister suggested earlier. The Government must recognise that those people could not have known that their homes were defective. It will not do to say that the matter can be dealt with under the present system of discretionary housing grants as the properties require 90 to 100 per cent. rebuilding grants. When we reach the later stages in our consideration of the Bill, I shall ask the Minister to discuss the matter with Newcastle borough council in order to find a solution to that constituency problem.
As we approach the millennium, we desperately need a housing strategy. Local authorities throughout the country, including the two that I represent—Stoke-on-Trent and Newcastle—manage to fulfil their housing responsibilities. The village of Bradeley in my constituency demonstrates how local authorities can be innovative and meet housing needs, but to do that they need more than legislation: sufficient funds need to be made available. Quite simply, the Government have not done that.
I believe that the challenge facing the current Government in respect of this legislation, the next Government—which will certainly be a Labour Government—and local authorities throughout the country is to plan for the millennium and make sure that we have decent housing that can be handed down the generations to our children and grandchildren.

Mr. Anthony Coombs: In giving a general but not unequivocal welcome to the Bill, I congratulate my hon. Friend the Minister for

Construction, Planning and Energy Efficiency on his hard work, particularly with the building industry, and his almost unrivalled grasp of the issues involved. It is a shame that he is not in his place—he has probably gone to dinner—nevertheless it should be recognised that he has done a wonderful job.
I should first declare an interest. I am proud to have been in the housebuilding industry for the past 20 years and I understand some of the problems that have been mentioned, particularly in respect of part II of the Bill. I can assure my hon. Friend the Member for Chipping Barnet (Sir S. Chapman) that I have always used an architect. Generally speaking, the architectural profession produces excellent work.
It would be remiss of me to mention some aspects of the Bill without referring to the extraordinary remarks by the right hon. Member for Chesterfield (Mr. Benn). He said that Conservative Members tended to laugh at what he had to say. I certainly did not laugh; I found his words absolutely chilling. I am glad that he said them, however, as I suspect that they reflect the views of a large proportion of Labour Members.

Mr. Keith Vaz: indicated dissent.

Mr. Coombs: The hon. Member for Leicester, East (Mr. Vaz) shakes his head, possibly signifying yet another split within the Labour party in this as in other areas of policy.
The right hon. Member for Chesterfield spoke in Castro-esque terms about the nationalisation or common ownership of land, and denigrated people's sincere attempts to own their own homes just because they might have to raise the money by taking on a mortgage. When the right hon. Gentleman was Viscount Stansgate, he might not have had to do that, but the vast majority of the rest of the world does. His comments might have been considered a slap in the face by people who aspire to home ownership in that way.
In that context, the capitalist society, as the right hon. Gentleman put it, has done rather a good job in terms of the condition of housing stock in Britain. As we have heard, in the past five years the proportion of dwellings regarded as unfit has fallen by about 10 per cent. to 1 million. The figure is still too high. We also heard that one third of those dwellings could be put right at a cost of less than £500 and that half were unfit in only one respect.
Throughout the building industry and in my constituency, the interaction of the private and public sector, technological advances and improved building regulations over the past few years have resulted in significant improvements in the general standard of our housing. To give just one example, the latest household survey, which relates to the period between 1979 and 1991, shows that when Labour was last in government, only 43 per cent. of pensioners—who are not regarded as a high wealth sector in society—had central heating in their homes; something that most people regard as pretty basic. The present figure is well over 75 per cent. That demonstrates an improvement in the housing conditions of a large proportion of people in Britain.
Part I of the Bill deals with housing renovation grants and grant regimes generally. The Government are absolutely right to put those matters on a discretionary, not a mandatory, basis, for the simple reason that councils should be able to decide their priorities in those matters. Their objection to a discretionary scheme sits ill with Labour Members who are always extolling the virtues of


giving local councils more power to object. As Lord Williams of Elvel said in the House of Lords on 20 February 1996:
Worse still, practice on how to apply the discretionary system will vary from local authority to local authority."—[Official Report, House of Lords, 20 February 1996; Vol. 569, c. 984.]

Mr. Deputy Speaker (Sir Geoffrey Lofthouse): Order. The hon. Gentleman must not quote speeches made in the House of Lords, except by Ministers.

Mr. Coombs: I stand admonished, Mr. Deputy Speaker. The fact that he said that that would be so demonstrates one of the strengths of the system, which until now has been reactive rather than proactive and has led to a pepper pot or static approach. The Bill will allow local authorities to target resources to ensure that renovation grants are properly monitored. In too many cases, they are not, and that leads to a waste of resources.
The proposed change would affect certain properties, particularly those owned by private landlords, who are not covered by the housing renovation grant scheme. Only 4 per cent. of approvals for renovation grants relate to properties owned by private landlords although they preside over one third of unfit buildings. It would allow local councils—if they wished, and I hope they do, irrespective of their political colour—to work with private landlords to improve the condition of their housing stock. Obviously, that will depend on the commitment of an individual council to its task and its willingness to work with private landlords.
It is important to avoid a feeling of injustice and discrimination—despite the neighbourhood renewal assessments—among those who will no longer receive housing renovation grants to which they feel automatically entitled. It is even more important that local councils who will be working on a strategic basis ensure that local communities have a sense of ownership in respect of improvements to the area.
When I represented Moseley on Birmingham city council, I worked closely with the Balsall Heath residents action group as Balsall Heath was an inner-city part of my ward. One of that group's continual gripes about the council in those days—irrespective of political control—was that improvements were being carried out despite them and over their heads. They had no feeling of ownership so they did not consider any improvements to be of lasting value.
Sadly, the housing renovation grant scheme—irrespective of the fact that it will be discretionary—continues to overlay the existing means test, which is complicated and which many of my thrifty constituents, who have maintained a certain level of income as a result of their savings, consider to be discriminatory. We have heard that there were £357 million worth of applications for housing renovation when £250 million was available. There will always be a scarcity of resources, irrespective of which party is in government at Westminster.
It is important that resources are used sensibly, not wasted, and to engage the efforts of the private sector through housing improvement trusts, venture capital trusts and so on, to add to available resources. Tax relief for essential improvements, even though it may exceed the £30,000 limit, is something that the Treasury should examine. There is an argument for allowing capital

receipts to be targeted for the purpose in some councils—[HON. MEMBERS: "Oh."]—subject to the councils being able to prove via the Audit Commission or the Department of the Environment that their overall financial position is such that the use of capital receipts would not be irresponsible.
I welcome the home repairs grant, which replaces the minor works assistance grants—particularly in respect of mobile home owners. There is an enormous number of caravan and mobile home owners in my constituency—the highest in the United Kingdom. Too often, they have missed out on grants for minor improvements that would make a significant difference to their properties. The scheme marks a significant advance.
We must attribute part II to not only my right hon. Friend the Secretary of State but Sir Michael Latham and his team. I am always slightly suspicious—it may just be bloody-mindedness on my part—when there is a consensus across the House in favour of one particular action, particularly when it involves greater Government interference in an industry as large as construction, which has a turnover of £50 billion and employs 5 million people. However, I accept that Sir Michael was right in identifying significant improvements that could be made to the industry. The estimate of 30 per cent. overcosting is probably not unrealistic, to the extent that the industry is too often confrontational—although I have never found it particularly so in my 25 years of dealing with contractors and sub-contractors.
Training standards are generally poor. Despite the existence—and here is a lesson for us all—of the Construction Industry Training Board, there is a lack of qualifications in what is a fragmented industry, and it is significantly undercapitalised in many cases—particularly in respect of smaller companies. I support the Bill's proposals to outlaw "pay when paid" contracts.
A company in my constituency, Burke Brothers, laid electrical cable along the M5 and M4. That firm, which employed about 90 people, worked with Tilbury Douglas. I do not suggest that that company, which was contracted by the Highways Agency, was at all to blame. As there was no easy way of arbitrating on the agency's refusal to pay Tilbury Douglas because the standard of work was not adequate, and because Tilbury Douglas operated a "pay when paid" contract with Burke Brothers, that firm ran into enormous financial difficulties. As a result, its 90 former employees work elsewhere or not at all. "Pay when paid" contracts are unrealistic and anachronistic, and they should be abolished.
I agree that the new engineering contract ought to be the industry standard, but I have some reservations about the circumstances under which it might be replaced and what might replace it, under the scheme for construction contracts. I am not sure who would activate the move to the mandatory, Government-led contract. Who would decide that a particular contract was not appropriate in terms of its payments and other provisions, and when? I see the potential, as did my hon. Friend the Member for Chorley (Mr. Dover), for considerable delay unless such questions are clearly answered by the Committee and the Bill.
A much clearer definition of construction operations is needed. We heard the plea made on behalf of the process industries. I believe that more and more construction will


be off-site, by prefabrication. Provision for that development needs to be made in the contractual conditions.
Although I welcome adjudication, we must ensure that it is not over used by people who are trying to seek an unjustified advantage in the contract. I would like adjudication to be continually used throughout a contract, but with recourse to the courts available at the end of the contract if either party felt aggrieved in respect of overpayment or contract length.
The power exercised by different commercial interests—particularly by large contractors over small firms—will remain in evidence, irrespective of the letter of contracts. Small contractors will still want more business from larger companies, so will be unwilling to rock the boat. Any contract should take cognisance of that.
One reason for confrontation in the building industry in recent years is the narrow profit margins resulting from the state of trade. When there is more meat, companies are prepared to share it. Firms too often sign up to a contract on which they will notionally make a loss at a particular price, hoping to negotiate a profit from the extras that come along during the contract's life. That practice is due to the state of trade, and I do not see how it can be avoided. When trade picks up, hopefully such practices will gradually disappear—as in the past.
I cannot understand why clause prevents a party to the contract who wishes to live in the property that is to be constructed from taking advantage of the new terms—particularly since people live in their own houses and, as a result, enter into contracts that are of significantly greater value than do people who work on a business basis. They obviously feel the results and therefore the need for arbitration in a far more intimate and intense way. I am not convinced that private householders should—subject possibly to a minimum £20,000 contract value—be excluded from the Bill's provisions. I hope that the Government will give some thought to that aspect.
The good in the Bill significantly outweighs those matters about which I have reservations—particularly part II. I ask only that any scheme that the Government introduce through regulations rather than primary legislation is not so bureaucratic as to increase costs and delays in the construction industry, which would be against the interests of everybody—including those people who are working so constructively with Sir Michael Latham.

Mr. William O'Brien: The Bill covers many issues, and we could spend a long time trying to consider them all, but I want to refer to the housing issues that arise out of it, because I consider housing to be the greatest social problem in the country. I know that we have unemployment benefit, community care, health care and education, but if we had proper and significant housing provision, many other social problems would be eased.
I want, therefore, to impress on the House the need to introduce a comprehensive housing strategy to resolve the problems that I, as a constituency Member of Parliament, encounter. I receive more correspondence and other

representations on housing issues than on any other subject. I know that unemployment is high on the agenda of the Labour party, but I must tell the Minister, the Conservative Government and my colleagues that we must place housing high on our agenda because of the social consequences of the lack of a housing strategy.
The Bill is designed to end grant assistance for low-income owners and landlords to bring their property up to a minimum standard of repair and to replace it with grants given at the discretion of the local authority. That is not a welcome move, because proper resources should be given to local authorities if they are to have responsibility for distributing grants.
The Bill would remove the basic human right to a home that is fit to live in. The current system gives a statutory right to cash help to bring property up to a minimum standard, subject to a means test. It ensures that owner-occupiers and tenants who are trapped in housing that is officially unfit to live in and who are unable to afford its repair are eligible for Government grant. A significant number of people find it difficult to provide the resources to bring their homes up to a proper quality.
It is now the Government's policy that elderly people should remain in their homes longer. The removal of the right to a Government grant—less than five years after its introduction—will extinguish any hope of help or support in many vulnerable people who live in homes that are in need of urgent repair. One in six—or 3.5 million—properties require urgent repairs costing more than £1,000.
The Bill refers to deferred action. That is an option that will legitimise doing nothing when a house is found to fail minimum standards. Unfitness will be officially sanctioned and many properties will suffer from blight while awaiting action, which will be put off. At the resource levels currently planned, many local authorities will be unable to use the new grant more flexibly, as cash will be spread too thinly to do much more than deal with the worst problems and meet obligations to pay grants to disabled people. We will witness a patch-and-mend system, which I consider totally unacceptable.
We have a serious reservation about the way in which legislation has been implemented—in particular, the lack of transparency in the allocation processes, including the competitive nature of the process, the role of the Government offices in the regions and the extent to which need is taken into account. We also have reservations about the fact that the number of areas able to access regeneration resources has been extended, while resources have been reduced.
Age Concern has told the Government that it is
disappointed that Government proposals to extend Part M of the building regulations to take account of the access requirements of disabled people … are not included in the bill.
The Minister has said that the Government are considering that issue, but unless it is addressed, greater problems will occur.
Age Concern also reports, in the briefing material that every hon. Member has received, that 71 per cent. of disabled facility grants were given to applicants aged 60 or over. That is the area at which grants should be targeted, but without the proper resources it will be more difficult to help people over 60.
The National Home Improvement Council has also presented a report, arising out of its house condition survey, that shows that about 1.5 million dwellings are


unfit for habitation and that a further 1.1 million, while not unfit, require substantial repair. We have evidence, therefore, of a significant problem in housing repair, and the reduction in grants will not help people who are in need of assistance.
Wakefield housing department reports a problem because a range of other grants and provisions aimed at helping people to improve and maintain the standard of their homes will also be affected by the Bill. The chairman of the housing committee makes it clear that, if the Bill is passed, the effect will be worrying for that housing authority.
Contrary to what the Minister said in his opening remarks about canvassing local authorities and receiving their support in principle for the Bill, my local authority has made it clear on more than one occasion that, without the proper resources and assistance from the Government to make grants, there will be a deterioration in the quality of housing stock throughout the Wakefield metropolitan district area. The annual capital allocation for 1996–97 that has been set in my area is half of what the authority will require if it is to meet the demand for housing grants and provide the help that is needed.
The glass industry has said that it could help with renovations and housing grants. In my area, which is part of the Yorkshire and Humberside area, there has been a substantial reduction in the number of grants made available. Without some additional provisions in the Bill, greater problems will arise. That is clear from the representations that I have received—as, I am sure, have other Members of Parliament—from constituents.
The Bill and the Housing Bill will do nothing to help the social problem of housing. Because of the lack of support from the Government on housing provision and the quality of housing, I shall join my colleagues in opposing the Bill tonight. I hope that, in Committee, the Government will consider carefully the amendments that we will table, because they would help to enhance the quality of housing through the grants system. I also hope that we will be given some assurances that people will not suffer because of the deterioration in provision that is outlined in the Bill.

Sir Anthony Durant: The hon. Member for Newham, North-West (Mr. Banks) has signalled to me requesting that I speak for only five minutes. I shall do my best.
I am chairman of the all-party group on the construction industry, so I feel that I should make a few comments. I am also a personal friend of Sir Michael Latham. He and I have been involved in politics for a long time. He did an outstanding job on his report and it is well worth all hon. Members' reading it.
The hon. Member for Holborn and St. Pancras (Mr. Dobson) made a fatuous and silly speech. It was wide of the Bill and no more than the usual soundbite stuff that we have come to expect from him.
However, the right hon. Member for Chesterfield (Mr. Benn) made an outstanding and extraordinary speech. He wants to nationalise the land. That has been attempted. I was a member of the Committee that considered the Community Land Act 1975, night after night, for about a month. The Bill was enacted and 80

acres were nationalised at a cost of £150 million. The measure was then dropped. The right hon. Gentleman did not mention the Labour party's experience in nationalising the land.
The Institution of Civil Engineers is concerned about contracting. It asked, and I in turn ask my hon. Friend the Minister, about the date of implementation of the Bill. The institution suggests that it should be some six months after Royal Assent. It wants time to amend its standard contracts in line with the Bill. It is also concerned about existing contracts, which it feels should stand. In addition, it would like clarification of some kind of outline of the scheme. I believe that that will come in the form of a statutory instrument. It would like to see that as soon as possible.
The Bill does not deal with professional negligence, which is another concern of the industry. I understand that that matter is being considered separately.
The institution feels that adjudication is good for obtaining a quick decision on a dispute during construction so that work can continue, but it is concerned that adjudication is being confused with arbitration. The decision resulting from adjudication should be binding only until completion; complex legal arguments should be dealt with later. That is in the Bill, and I merely emphasise it.
The institution is also concerned about the withholding of payments and the suspending of performance—walking off site. It suggests that a contractor intending to withhold payments should give valid reasons for so doing. It proposes an extra clause, which on careful study does seem reasonable, under which, if a contractor sought an adjudication on whether effective notice of withholding payment had been given, the right of a sub-contractor to walk off site could not be exercised on withholding payment.
Those are some of the worries of the Institution of Civil Engineers of which my hon. Friend the Minister is probably well aware, but I simply wanted to put them on the record.
There are matters in the Latham report which I hoped would be in the Bill. Its recommendation on insolvency is not in the Bill. That is a great worry to the industry, and I hope that it will be considered later. There is also the matter of who activates the provisions of the scheme, which has been raised in an intervention. Disputes could arise over whether the scheme has been activated. That point needs clarification.
Part I has been unjustly slammed by the Opposition. No credit has been given for the fact that facilities for disabled people will be given grants. Such facilities are important.

Mrs. Maddock: I did recognise that fact in my speech.

Sir Anthony Durant: I apologise. The hon. Lady must have done so during the short time I was out of the Chamber getting some nourishment. I saw her doing the same just after me. I accept that. The grants for facilities for disabled people are generous.
I also welcome the grants for clearance, which are important in respect of large estates where clearance is necessary if new, smart estates are to be built. The Bill will assist councils in dealing with grants for clearance.
Those are the few general points that I wished to make. I hope that I have not been too long for the hon. Member for Newham, North-West. I support the Bill and shall vote for it tonight.

Mr. George Stevenson: We have heard much from Conservative Members about such important matters as the organisation of the architecture profession, but I want to concentrate on part I and the scandal with regard to renovation grants.
Having created the crisis of unfit houses and the lack of resources to meet that scandalous situation, the Government intend to remove the mandatory right to an improvement grant for houses that are statutorily unfit and, effectively, to walk away from the problem.
Like every other hon. Member, I was prepared to give the Minister the benefit of the doubt and listen to what he had to say, but his arguments fell into a significant pit of disrepute when he tried to convince the House that the Government's intention was to pass responsibility to local authorities. The Minister was trying to convince us that the Government support local authorities and that they think that local authorities do a good job. The Government have spent 17 years systematically undermining local authorities, yet the Minister has the temerity to suggest that the Government's motivation here is their love for local authorities and their belief that all local authorities are so competent that they will do a better job than the Government. It was at that point that the Minister's argument fell to pieces.
As we approach the 21st century, the removal of that right to grant will condemn millions of people to live in houses that are unfit for habitation. Hon. Members must reflect on that. After 17 years of Tory rule, that is the prospect that millions of people face. There are hundreds of such people in Stoke-on-Trent, many of them in my constituency.
I want to give the House some idea, in the short time available, of how serious the situation is, using the example of Stoke-on-Trent, which is by no means unusual. Hundreds of authorities face the same problem. I give the following information for Conservative Members' delectation.
The latest information from Stoke-on-Trent shows that 419 owner-occupiers are waiting for a mandatory renovation grant. Sixty-one involve landlords on whom notices have been served, 74 are for mandatory disabled facility grants and 57 are for assistance for minor works. In the case of 51 mandatory renovation grants to landlords where notices have been served, and in the case of 167 mandatory disabled facility grants, application forms have been issued.
As a result of preliminary investigations by the local authority, it is estimated that some 780 owner-occupiers are in unfit properties where initial property appraisal has shown that they meet all the criteria for a mandatory grant. I could give more statistics, but I shall not bore the House—particularly Conservative Members, who are not very interested.
If we tot up the figures, we see that, in Stoke-on-Trent alone, 1,600 properties would qualify for grant, about 800 of which would qualify for a mandatory grant, yet they have no chance of getting one.
What do the Government do in the light of that disgraceful situation, which affects not only Stoke-on-Trent, but authorities countrywide? They walk away from it. They pick up their ball and walk away. The Minister is not fooling anyone when he tells us that that is because the Government have great faith in local authorities. We all know that the reason for the Bill is that the Government have been stung by the justified criticism of the chaos that they have created in this area of housing. When the Bill becomes law they want to be able to say, "It has nowt to do with us; local authorities are to blame." That is the real motivation behind the Bill. If the present Government are still in power—which I doubt—Ministers may well reply to our questions by saying, "Don't blame us; blame local authorities."
My hon. Friend the Member for Stoke-on-Trent, North (Ms Walley) mentioned the Under-Secretary of State's visit to Stoke-on-Trent following our representations. I, too, thank the Under-Secretary of State for taking the time and trouble to go and see for himself what is happening. Our arguments were clear; the hon. Gentleman listened, he saw, and his heart melted slightly. We thought that it had, anyway, and we thought that there would be a little more money to spend on that vital area—£300,000 in supplementary credit, in fact.
This is where I depart slightly from what was said by my hon. Friend. Supplementary credit approval does not mean more money from the Government; it means that the council has authority to borrow, and that local taxpayers must pay. As I have said, I thank the Minister for his interest, for his visit, and for taking part in discussions with us, but the fact remains that, having recognised the problem, he said that no more Government money was available—"but you can borrow a bit more if you like, and council tax payers can pay."
What sort of approach is that, in view of the statistics that I gave relating to the authority represented by my hon. Friends the Members for Stoke-on-Trent, North, for Stoke-on-Trent, Central (Mr. Fisher) and me? Many properties will continue to be unfit for human habitation, and will deteriorate. Local authorities cannot meet their legal obligations—and that is not accidental, but a direct result of Government policy. As we enter the latter part of the 20th century, millions of people throughout the country are finding themselves trapped in housing that is unfit for human habitation, and neither the Bill nor Ministers' speeches can give them any hope. That is the legacy of 17 years of Tory Britain; the sooner it is changed, the better.

Mr. Peter L. Pike: As we are short of time and several of my hon. Friends wish to speak, and because it is of utmost importance to my constituency, I shall concentrate on the part of the Bill that deals with grants. I shall, however, refer briefly to part II, and the measures that arise from the Latham report. Having known Michael Latham, and having studied the report when it was published, I believed that action was necessary, and I am glad that the Bill provides for action. I recognise, however, that many of the issues involved would best be debated in Committee.
I agree with some hon. Members who have spoken today, and with bodies such as Age Concern, that the Government have merely paid lip service to the


importance of the home energy efficiency scheme by including measures in the Bill. The Chancellor of the Exchequer cut more than £30 million from the programme in last year's Budget. That is not consistent; it is nonsense.
Some 250,186 dwellings in the north-west are unfit for habitation. It is a serious problem—certainly in my constituency, where much of the housing stock is pre-1918 and in need of major renovation. Let us consider what the Government have done for home improvement. In 1983, there was a bonanza before the general election when, as hon. Members will recall, councils were given unlimited resources to provide grants to improve older housing stock. I believed at the time that that was a deliberate attempt to influence the outcome of the election, and to a large extent my suspicions proved correct. Immediately after the election, there was a clampdown on the available funds.
From that time on, the Government have consistently attacked home improvement and modernisation. In the 1988 Budget, they stopped tax relief on mortgages and loans; that came into effect on 6 April. In the 1984 Budget, they introduced VAT on home improvement work; that came into effect on 1 June 1984. Then there was the means test for grant introduced in 1990 as a result of the Local Government and Housing Act 1989. In ending mandatory grants the Government are driving another nail into the coffin, preventing the improvement of older housing.
My hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) said that he thought that, when a Minister visited his constituency and saw the problem, his heart melted a little. Housing Minister after housing Minister has been to Burnley, but I have not seen one respond in a way that would do a single thing to deal with the problem. They have all uttered nice words of concern, but not a penny has been spent. When Ian Gow was a housing Minister he visited Burnley, and I must say in all fairness that he did not only go to the houses that we had arranged for him to go to; he stopped the car here, there and everywhere, and jumped out to look at houses for himself. When he returned to London, however, he wrote a nice letter saying that he recognised the problem but that no more cash was available at that time.
Another former housing Minister, the right hon. Member for Ealing, Acton (Sir G. Young), visited Burnley twice. I have lobbied him on behalf of the north-west, including Wigan; I have lobbied him with groups representing Merseyside, Greater Manchester, Lancashire and Cheshire—with councillors, council officers and Members of Parliament. At the time—some four years ago—the right hon. Gentleman recognised the difficulties involved in a service that is demand-led. The answer, however, is not to clamp down on grants and do away with them, as the Government are doing; that merely directs resources in a slightly different direction.
All the north-east Lancashire authorities came down to meet the right hon. Member for Acton. He said then that north-east Lancashire, and Burnley in particular, had a peculiar cocktail of problems: low incomes, a high proportion of home ownership and pre-1918 properties and low values, even after improvement. Let me tell the Minister who will wind up the debate that we still have exactly that problem, and that the Bill does nothing to deal with it.
How will councils cope under the new arrangements that will do away with the mandatory right to ask for a grant? On many occasions, former Ministers refused to acknowledge that councils were having to exercise rationing because they were unable to meet their statutory requirement to provide mandatory grants due to lack of cash. How does the Under-Secretary think that councils with major problems in their areas will be able to determine their priorities? I look at Burnley and wonder whether the priority will be Daneshouse, Stoneyholme or Burnley Wood. I am glad that I am not on the council and have to take such difficult decisions. There are just not enough resources to deal with the problems.
I hope that there will be flexibility in the use of the three-year qualification. If no one will move into the odd old terraced house in Burnley that has not been improved, and the property becomes empty because people have few resources and cannot do it up because of the grants arrangement, the house will become derelict and destroy the whole terrace. The Minister referred to pepper-potting, which I recognise can cause difficulties and problems. The Under-Secretary must recognise, however, that in old industrial towns, where a terrace can be as long as the road, the entire terrace can be destroyed if individual houses are not improved or maintained and become empty and derelict. Where there are few resources and low-value properties, it is very difficult to deal with the problem.
To say that there is an ability to defer grants for disabled facilities for a year is unacceptable. If a disabled person is found to be eligible and in need of a grant to provide facilities to overcome their disability, they should receive it straight away. Councils such as my local authority have problems because they have always virtually run out of resources after the first two or three months of the year and can deal only with priorities for the rest of the year. There are many other instances in which they should be able to give grants, but cannot, and people suffer as a result. The Government must recognise those major problems in places such as Burnley and north-east Lancashire and realise that the only way in which to solve them is to make more resources available to address the needs of the older housing stock.

9 pm

Mr. Ian Pearson: The Bill is lengthy but disappointing. Some of its proposals are welcome, especially those that implement certain recommendations of the Latham report, on which, regrettably, time will not allow me to comment. Ultimately, however, the Bill is a failure because it does nothing to tackle the fundamental problem of inadequate investment in new housing and in the regeneration and renovation of older sub-standard housing. The dismantling of the mandatory renovation grant system is simply a back-door way to cut costs. It will mean that more owner-occupiers and tenants will have to live in housing misery for longer—and that some will have to face the fact that they might never see their housing conditions improved in their lifetimes.
In Dudley, the local authority has 500 outstanding housing grant applications, which total about £4.25 million, yet it has seen its specified capital grant almost chopped in half since the regime was introduced, from £2.75 million in 1991–92 to less than £1.5 million this year. It is estimated that people in the queue will have to wait at least three years before their applications are


sorted out—notwithstanding the growing queues for disabled facilities due to financial restrictions, which are an all too depressing feature in my local area.
What is more, that is only the tip of the iceberg. A housing stock condition survey conducted last year in Dudley showed that there were 5,000 unfit dwellings. Across all sectors, about £300 million is needed to bring the houses up to a basic standard of habitation. Yet at the same time, the housing investment programme allocation grant to Dudley borough this year was only £12 million. At that rate of progress, it will take 25 years to deal with the current problems, let alone with what might happen in future. The Bill will also do nothing to solve the problems of 11,000 people in Dudley who are on the housing waiting list.
Part IV of the Bill includes a measure to extend the Secretary of State's powers to provide financial assistance, principally through providing a single legislative basis for the single regeneration budget. I see the sense of a single legislative basis for the SRB, but I am very disappointed that the business start-up scheme is still one of the programmes in the SRB pot. It is wrong that in some parts of the country one can start a business if one wants but in others one cannot. There needs to be a national scheme to help people who are taking their first entrepreneurial step, yet it is just not available.
As someone who is involved in advising a number of local authorities and training and enterprise councils on preparing bids for the first round of SRB funds and advising Government offices on assessing bids, I must admit that the SRB process has produced some significant benefits. It has made possible a much-needed sharpening up of some local authorities and training and enterprise councils, which the city challenge process also helped to produce. It has enabled them to take a more strategic approach to urban regeneration and to act in partnership, which is now becoming an established feature of activity in urban regeneration.
It is tough to recognise that, although an area may suffer from incredible deprivation, its funding applications need to be rejected because the local authority and its partners are not up to the job. However, if that is the case and better value for money can be had elsewhere, so be it; it has to be done. A balance needs to be struck between the needs of the area and the ability of partners to deliver.
There are a number of practical difficulties with the way in which the SRB regime works in practice. A project to install inside toilets and replace rotten windows to make houses fit for habitation is extremely important to those living in conditions of disrepair, such as those in parts of my constituency, but it is not a sexy SRB bid. The SRB criterion of partnership skews bids towards those projects which can demonstrate partnership.
Many housing programmes cannot demonstrate partnership, so it is not surprising that housing schemes in my patch have done badly as a result of the change from estate action to SRB. In 1994, £3.78 million was allocated to housing schemes, but this year only £430,000 has been allocated. That reflects a judgment of what can be got through the Government office as a successful SRB bid as much as it reflects Government cuts in funding and the views of local partners on what priorities should be set.
Similar problems exist with private sector leverage. It is a laudable principle and, while I accept that it should be a feature of the SRB bidding process, bids that rely entirely on those criteria and have no flexibility are fundamentally flawed.
Part V of the Bill enables the Secretary of State to set up one or more residuary bodies to receive any property, rights or liabilities from urban development corporations and other bodies. The Department of the Environment memorandum on the Bill dated 14 February provided a justification for the proposal. It said:
it makes sense to create a single body to deal with all the remaining issues, rather than to perpetuate the life of each corporation until its functions have been completed. The alternative would be to hand the residuary functions to the Secretary of State to be dealt with by the appropriate regional Government Office. Not only might this, in some cases, result in wasteful duplication of effort, it would also require the application of skills not normally available in GOs unless they were to engage consultants.
I must admit to surprise at that, because my experience of the west midlands residuary body and others is that they were not reticent in buying in skills from consultants. I should add that, if Government offices do not have the skills to handle the functions of urban development corporations, they should acquire them. They, after all, have to decide on urban regeneration bids and they ought to become strategic partners in urban and regional regeneration, not pure bag carriers for the Government.
If the Government do not want to go down the Government office route, an alternative is to consider using English Partnerships as a vehicle for bids. However, the Government do not seem to be doing so. While the memorandum talks about creating a single body to deal with all the remaining issues, I received this reply from the Under-Secretary of State for the Environment, the hon. Member for Croydon, Central (Sir P. Beresford), to a question about what would happen to the financial liabilities incurred by the urban development corporations:
negotiations with potential successor bodies are still taking place."—[Official Report, 23 April 1996; Vol. 276, c. 64.]
On 14 February the Government said that a single body makes sense, but on 23 April they said that they were in negotiation with potential successor bodies. Which is right? We badly need an explanation.
The Bill will do nothing for the many hundreds of my constituents who live in housing misery. On that basis, while I welcome its positive measures for the construction industry, it must be opposed.

Mr. Gordon Prentice: I am grateful for the opportunity to contribute to this debate, because housing is a big issue in north-east Lancashire. Pendle lies alongside the constituency of my hon. Friend the Member for Burnley (Mr. Pike) and shares common characteristics with it.
I listened carefully to the Minister's opening remarks. He convinced me, as if I needed any convincing, that this is another fraudulent Bill from a fraudulent Government. He said that it would create flexibility and give help where it is most needed. Some 15,000 properties in my borough—45 per cent. of the stock—need renovation. What is the point of targeting such a vast problem? What can be done when so much of the stock needs renovation'? It requires not flexibility but more cash and resources to tackle the problem.
The Minister went on to say—this is one of those comforting Tory nostrums with which people find it difficult to disagree—that home owners are responsible for their own homes. No one would disagree with that, but there are compelling public policy considerations that mean that the state has a role to play in housing provision. Of course it is right that home owners are responsible for their own homes but what happens when they are impoverished—when they are on low wages or unemployed—and cannot afford to do up their homes? That is the position in north-east Lancashire. Huge deprivation is caused by bad housing, low wages and unemployment. People cannot find the money to do up their houses.
Poor housing means poor health. In my constituency, 30 per cent. of households have a member suffering from a limiting long-term illness. That compares with a national average of 18 per cent. and is another compelling reason for tackling the decrepit housing stock. The hon. Member for Christchurch (Mrs. Maddock) reminded us of what the Age Concern document said:
The harmful effects of poor housing on health are well recorded. Dampness can lead to bronchial and respiratory illnesses; cold housing to hypothermia and increased susceptibility to illnesses; unsafe houses can lead to accident and deaths".
How true that is.
There is also a burden on the health service. The hon. Member for Christchurch mentioned the £800 million that it costs the NHS to remedy conditions that should be tackled at source by dealing with clapped-out houses that should have been renovated years ago. The Minister said that councils, as opposed to the local authority associations, welcome the move from mandatory to discretionary grants. Where is the evidence for that? It another ministerial assertion plucked from the air. Perhaps he was talking only of Conservative councils, of which I think there are about 11.
I seem to be giving you a headache, Mr. Deputy Speaker. This is an important issue and I want to make sure that the Minister hears what I am saying. I can modulate my voice now that I have the Minister's attention. Mandatory grants were described by the Lancashire Evening Telegraph in the year of my election to the House as a "sick joke". The newspaper, which has a high readership in the area, said that thousands of people with the legal right to mandatory grants do not get them because they are, in effect, rationed. That was the point I made to the Minister earlier.
That is something that crops up year after year in the housing strategy documents published by my local authority. The 1995 document stated that applications
are processed at a rate determined by the level of funds available.
That is not a solution. They were not mandatory grants, but arbitrary grants yet those grants were needed.
North-east Lancashire has the oldest housing stock in the north-west and perhaps the oldest in the country; it is totally clapped out. People should not be living in many of the houses. In my constituency, 20,000 houses were built before 1919, which is 57 per cent. of all dwellings, 65 per cent. of the houses are in band A, which is the lowest council tax band, 18,000 homes were built before the turn of the century and 15,000 are assessed as in need of renovation. We are talking about 15,000 families living in houses that need to be renovated. Also, 2,150 additional homes failed to meet current fitness standards. The local

authority estimates that the cost of improving stock, bringing it up to standard and making it fit for human habitation would be £14 million. There is no getting away from the fact—

Dame Elaine Kellett-Bowman: rose—

Mr. Prentice: I think that I can anticipate what the hon. Lady is about to say, but I will give way to her even though she has only just walked into the Chamber.

Dame Elaine Kellett-Bowman: Oh, no she has not—she has been sitting over there.
May I point out to the hon. Gentleman that my constituency has a very elderly housing stock? Many houses and schools are more than 300 years old, but, because we have had a Conservative city council for most of the time, we have steadily got on with renovating those houses. Houses that were worth £200 when I first became the Member of Parliament were given council grants to be renovated. On St. George's quay, there are now some beautiful houses, which will last another century. That is because the local authority did its task over the years. It did not say, "Woe is me", and leave it to the next generation. We got on with the job when it came.

Mr. Prentice: Lancaster is now Labour-controlled, and perhaps I am looking at the reason for that change of control. There is no comparison between Lancaster and north-east Lancashire.
We need cash to make a serious attack on housing repairs, dilapidation and decay. I mentioned that 15,000 houses were in need of renovation and that an additional 2,150 were unfit for human habitation. How many mandatory grants did my local authority award in 1995? Only 99 and 12 discretionary grants. In 1995–96, it awarded 122 mandatory grants and 12 discretionary grants. This year, in the housing investment programme, which looks forward to 1996–97—the current year—the number of mandatory grants will plummet to 70 from 122 and the number of discretionary grants to 12. That cannot even begin to make a dent in the problem.
As my hon. Friend the Member for Stoke-on-Trent, North (Ms Walley) said, the Minister is being completely disingenuous in saying that local authorities will be given responsibility and that the discretion that the Bill offers them will magically provide a remedy that was not there before. The harsh truth is that local authorities have been starved of cash and have not been able to use their capital receipts to do up the housing stock and we are paying the price for that.
I started by saying that the Bill is totally fraudulent. I suspect that no one in my constituency would disagree with that assessment.

Mr. Tony Banks: This is a comprehensive Bill, and I should like to touch on a couple of its provisions.
I do not think that the removal of mandatory grants will make the situation any better. We currently cannot keep up with demand, and there is no way of attempting seriously to deal with the problem by saying that demand has been unrealistic and that we will get rid of mandatory grants.
We have an enormous range of problems, particularly in London. In my area of Newham, housing is undoubtedly our most severe social problem. Most of the case load at my advice surgery in Stratford is about housing, and much of it is about private sector housing. Contrary to popular belief, most of the properties—or a majority of them in my constituency, in the north of the borough—are in the private sector. Much of that housing is seriously dilapidated, and I think that this Bill will make the situation worse.
We have a problem in London. In 1991, 21 per cent. of private sector stock was designated unfit, yet public expenditure on renovation grants is currently less than a third of the 1983 level in real terms. There are 175,000 private sector dwellings in London that are statutorily unfit, many of which will be inhabited by elderly owner-occupiers. Previously all owners on low incomes would have qualified for grants, but now only a few will be eligible. I do not understand how the Minister can possibly say that this Bill will improve housing in the east end or in London generally.
As I understand clause 139, it gives enormous powers to Ministers without any positive vote of the House of Commons. If we are to consider transferring assets to other statutory bodies, particularly to residuary bodies, we must realise that the track record of residuary bodies is not good—again, that is particularly so in London. The process involves taking public property and handing it over to unaccountable, hand-picked men, and to the occasional woman, to dispose of as they see fit—without any proper accountability or control.
The classic example of residuary bodies in London was, of course, the London residuary body, which was set up under the chairmanship of Sir Godfrey Taylor, a former Tory leader of Croydon council. The Government have always been very wise and astute in picking a Tory stooge to do their dirty work for them. That residuary body was responsible for disposing of a great many public assets.
Residuary bodies simply do not have the degree of public accountability that elected councils or elected bodies have, and we must complain about that. The public do not have access to the meetings at which public assets are disposed of, and they are not able to read the minutes of those meetings. Deals were done behind closed doors. When we tried to ask questions about the activities of residuary bodies, we were told that that is a matter for the residuary body, or that it is a matter of commercial confidentiality. That money and those assets belong to the public. In many ways, they are being given away and flogged off at knockdown prices, and that is totally unacceptable.
Who are the people appointed to residuary bodies? They are mates of Ministers and old, clapped-out Tory councillors—of whom there are now many, given what has been happening to the Tories in recent years. Those people get stuck on residuary bodies and pull down very substantial fees for turning up for the odd day, and no doubt a good lunch afterwards. Those practices bring the whole system into disrepute.
The classic example was the London residuary body, which is the type of body that we are talking about in the Bill. The House should be very wary of handing over anything to such a body. Hon. Members should consider

the disposal of county hall. It was sold to Shirayama Shokusan, a shadowy Japanese company that we knew very little about. Indeed, the London residuary body knew nothing about it, which was proven by the way in which events subsequently unfolded. Criticisms of the London residuary body abound in the text of reports of the Public Accounts Committee and the National Audit Office.
First, the London residuary body sells county hall. The agreed price is £50 million but Shirayama says that it cannot in fact afford that sum but will pay £42 million. The residuary body says that it will sue but Shirayama asks how it can because Shirayama has no assets in this country. Shirayama agrees to pay £50 million—£40 million down and the other £10 million out of future profits.
There was no bank guarantee, there were confidentiality clauses and there was no contractual arrangement with the London residuary body for Shirayama Shokusan to complete the development. Despite all that, the London residuary body continues to say that it is prepared to accept the deal. The remaining £10 million is supposed to come from profits to the year 2012, but Shirayama then says that it does not expect to make any profits between now and then. London charge payers will therefore have to whistle for that £10 million—they will never see it.
Given what is happening at county hall, anyone who thinks that once public assets are handed to a body such as the London residuary body it will strike a proper deal on behalf of taxpayers and charge payers is whistling in the dark because it is not going to happen. The fact is that Londoners have been robbed by the London residuary body.
I wanted to have the opportunity to sack the incompetent Sir Tag Taylor. My hon. Friends on the Front Bench know that I am not an ambitious man, but I want to take horrible revenge on the London residuary body. I want to introduce an element of red terror to those who have stripped the GLC of its assets and sold so many of them at give-away prices. I want the opportunity to find out where all the bodies are buried. If my hon. Friends will let me do that, I shall die a very happy man.

Mr. Keith Vaz: This has been an important debate because it has shown yet again the enormous gulf that exists between the two parties on housing and regeneration issues. The subject matter in the Bill goes to the very heart of three crucial aspects of policy.
My hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) is very fond of boxing metaphors. The House will be well aware that today he scored a knockout to add to that given last Thursday, when the verdict of the people of this country on the Government's performance was passed. Conservative seat after Conservative seat fell to Labour. After two drubbings in successive years, even political pundits such as Mr. Peter Snow were struggling on Thursday night to invent a new word more pejorative than "haemorrhaging" to describe the loss of Conservative support.
My hon. Friends have made some excellent contributions to today's debate. They spoke with great passion and conviction because they are fully aware of the impact that the Government have had on their


constituents. My right hon. Friend the Member for Chesterfield (Mr. Benn) made a most interesting contribution on yesterday's activities on Guinness land. He fascinated the House with details of the number of people who turned up and the extent of their activities. He rightly said that the House must accept that people have a right to decent accommodation.
My hon. Friend the Member for Stoke-on-Trent, North (Ms Walley) pointed out that the ending of mandatory housing grants will send an earthquake through her constituency. I am determined to be nice about both my Stoke colleagues despite the fact that Leicester City will be playing Stoke on Sunday night for a place at Wembley.
My hon. Friend the Member for Normanton (Mr. O'Brien) was right to complain about the unfairness and injustice of the single regeneration budget. My hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) described the ending of mandatory grants as a scandal.
My hon. Friend the Member for Burnley (Mr. Pike), a former council leader, may not have melted the hearts of housing Ministers as he had wished to do, but he certainly touched the hearts of his Labour colleagues. My hon. Friend the Member for Dudley, West (Mr. Pearson) spoke from enormous experience gained from advising Government offices, training and enterprise councils and other bodies about the single regeneration budget. He said that a balance needed to be struck between the needs of an area and the abilities of the partners to deliver what the SRB had to offer.
My hon. Friend the Member for Pendle (Mr. Prentice) talked of the 15,000 families in Pendle who are living in unfit housing. Finally, if there is an expert on the matter in the House it must be my hon. Friend the Member for Newham, North-West (Mr. Banks), to whom we all pay tribute for his excellent work in exposing the sham of the sale of county hall.
I thank Conservative Members for their contributions to the debate, including the hon. Members for Bolton, North-East (Mr. Thurnham) and for Wyre Forest (Mr. Coombs)—who is not in his place but who must have damned his future ministerial career, but delighted Labour Members, when he asked for the targeting of capital receipts. The hon. Member for Reading, West (Sir A. Durant), who has experience of construction, also made some useful points.
My hon. Friend the Member for Holborn and St. Pancras dealt with the Labour party's objections to the housing and construction provisions of the Bill. I add my tribute to Sir Michael Latham, my former neighbour in Leicestershire. He has received a lot of praise from hon. Members on both sides of the House, so he must be an ideal candidate for canonisation. Perhaps the Secretary of State and I should write a joint letter to the Pope asking him to progress this. I have never heard so much praise heaped on a former Member of the House.
In the time available to me, I intend to deal with the provisions that affect architects and the issues of regeneration policy. All hon. Members would agree that it is important that the profession of architecture is properly regulated and that there is an adequate system of registration. The current arrangements have been in existence for 60 years, so any change is likely to be difficult—as the hon. Member for Chipping Barnet (Sir S. Chapman), the only self-confessed architect in this place, explained.
The Bill's provisions on registration and the composition of the board will have to be scrutinised carefully in Committee. The Labour party wants to see increased consumer protection through a revised registration board. However, it is important that the board has the support of the profession. It is clear, from the representations that have been received, that there is widespread concern in the profession about the level of control. We support the views that have been put to the Government, but they have not accepted that there should be a minimalist board that limits the possibility of the needless and expensive duplication of professional services.

Sir Sydney Chapman: The hon. Gentleman may recall my saying that the General Medical Council is about to increase the lay membership of its council from 13 to 25, out of a total membership of 102. If he believes that the majority on the Architects Registration Council of the United Kingdom board—who are lay people—should be increased, does he believe that that should apply to every other profession?

Mr. Vaz: This may be the first step to regulating and registering other professions. Perhaps the hon. Gentleman could raise that if he serves on the Committee. I would like to see better regulation of the legal profession. To be fair to the Secretary of State—we are all delighted that he is here at last, following his various visits to different parts of the country; we try to be fair, compassionate and kind to him when he is present in the House, because someone has to be—it was not he who began the process of dismantling urban Britain; he merely presided over its final collapse.
As hon. Members are aware, the dismantling of regeneration policy began when the right hon. Member for Kingston upon Thames (Mr. Lamont), the then Chancellor of the Exchequer, announced the end of the urban programme in 1992. That announcement was swiftly followed by a letter to the leaders of 57 local authorities formally abolishing the programme. The urban programme was the mainstay of regeneration policy for more than a generation, and it was brought to an end with no consultation and with even less thought.
In the context of the regeneration policy of the Government, the decision to axe the urban programme was perfectly understandable. We have, after all, had 28 different regeneration initiatives over the past 17 years. We have had a bewildering compilation of initiatives, each launched in a blaze of publicity, each reducing the amount of resources and each top-sliced from its predecessor.
Whatever became of the urban partnership fund, the enterprise zones or the 26 other schemes? To my mind, first prize in any regeneration contest must go to the Minister or to the official in the Department of the Environment who dreams up the names of the schemes. He or she should get the Booker prize for fiction. Out of this morass comes the single regeneration budget—no extra resources, no new political direction, just a new name that the Bill seeks to give to a new, all-embracing scheme.
We believe that the philosophy of partnership must be at the heart of regeneration. When we use the word "partnership", we do so to show, in a practical sense, what local government is achieving with its principal partners.
Up and down the country, Labour local government has been working for decades to make the partnership ideal a reality. Ministers know for themselves, because they have seen the evidence from the hundreds of photo-calls that they have attended, that the civic leadership of urban Britain, which is exclusively Labour, has delivered all that was promised to its people. We have seen a galaxy of innovative schemes in Manchester, Birmingham, Glasgow, Salford and in countless other towns and cities.

The Secretary of State for the Environment (Mr. John Gummer): I wonder whether the hon. Gentleman would agree that the only reason why Labour local councils enter into any partnership is because they were forced into it by the Government. Until that Government insistence, Labour local councils never entered into partnership with anyone. At the moment, they allow such partnership because they have to. If there were a Labour Government there would be no partnership in local authorities.

Mr. Vaz: The Secretary of State would not know a partner if it sat on his lap and asked for support. The fact is that Labour local government had worked in partnership for decades before the Government decided to jump on the bandwagon. But for the determination of local authorities leaders and those councillors who supported schemes in different towns and cities, such partnership would never have been achieved. Instead of constantly attacking local government and using the most successful schemes for blatant political propaganda, the Government should hail their success and use that good practice as an example to the world.
Robbed of civic pride because of Ministers' pursuit of an outdated anti-municipal ideology, local government has sought to restore that pride to its citizens. It has offered them a better quality of life. Local government has done so with the use of scarce resources, which has been an enormous challenge and, despite ministerial criticism, it has responded magnificently.
There can be no effective regeneration policy without the involvement, support and expertise of the private sector. Business people, however, who are keen to work with local government, have been badly let down by the Conservative party. I have visited hundreds of schemes and met hundreds of business people. It has become clear to me that there is an enormous amount of enthusiasm for potential projects, and a legacy of actual involvement, but real complaint is made that the Government, and this Secretary of State, refuse to listen. The private sector-public sector partnership, so vital to regeneration, has as its cornerstone the recognition of community pride and advancement. Many are shocked at the language used by the Secretary of State in attacking local government. They want to work with local government. The Bill does not help them to do that.
The talent and enterprise exist. Of course the private sector wants a return; it would be absurd and ludicrous to suggest otherwise. But it shares the view of local councils that if, at the end of the regeneration process, there is no physical and social improvement, it is not worth pursuing. The private sector wants to invest and quite rightly requires shared ownership of the regeneration process, provided the economic climate and conditions allow it to do so.
The third partner in the regeneration process, which does not even get a mention in the Bill, is the voluntary sector. To Labour it is an equal partner with the others. Neglected by the Government, who do not even bother to consult it on the Bill or any other issue, it has struggled valiantly as its role and activities have been cut, yet that sector represents organisations at the coal face, which deliver commitments to local people.
The Bill provides a legislative basis for the single regeneration budget, which has already managed two rounds to date. It is an odd situation to pass legislation after the event, but so be it. What has been created is the SRB challenge fund—I am sure hon. Members will note the sporty, competitive name. It will be to the regeneration world what the King George VI cup is to racing and the Benson and Hedges cup is to cricket. Unlike a cricket match, where there is a 50 per cent. chance of winning, the odds are stacked heavily against people in this Government gameshow.
When the SRB was created no extra resources were provided and all the existing programmes were merely added together. Even worse, the number of authorities that would have benefited from the old urban programme has greatly increased while the chances of success have been greatly diminished. If one increases the number of bidders and reduces the amount of funds, one is heading for trouble.
The way in which the competitive process has operated is much worse. It insults the intelligence of those in local government. It uses valuable time, effort and resources. It is an established fact that there should be no guarantees and no blank cheques for public money, but it should also go without saying that to pit great cities and towns against one another—Brighton against Birmingham, Leicester against Luton, Manchester against Maidstone—in that perverse way builds up expectation and provides disappointment and dissatisfaction. It does not take into consideration the issue of need and the circumstances prevailing in each area.
Department of the Environment press releases always dwell on the winners of those competitions, but the figures for failed bids are stark. In round two of the bidding process, the percentage failure rate was as follows: 59 per cent. in the eastern region, 54 per cent. in London, 61 per cent. in the north-west, 54 per cent. in the south-west, 48 per cent. in the north-east and 46 per cent. in Merseyside. Bids worth £480 million, for 156 schemes, were rejected by the Government. No consolation prize exists for those who have lost—only the long wait for the next round of bidding.

Mr. Dover: Will the hon. Gentleman give way?

Mr. Vaz: No.
We have always accepted the need for one cohesive regeneration grant, but Labour will abolish the competitive process as a means of obtaining funds.
We shall create strict criteria that must be met if regeneration funds are to be awarded. Those criteria will encourage those requesting regeneration funds to produce quality, properly costed bids, and they must demonstrate their requests by showing the involvement of their partners, including the private sector. Access to private sector funds will be of utmost importance under a scheme that proposes a standstill budget.
Conservative Governments have always shown a lack of vision. The annuality rules of city challenge, the drive for quick-fix solutions, has not worked. Five years is not long enough to plan or implement a vision statement for a local area. Each area needs to create a strategic plan that takes into account the needs of the local community.
Ministers have long abandoned their role as initiators. Central Government must give the lead, not with imposed ideas, but by signalling political direction. The regional offices must be restructured and made more effective and accountable; there is nothing about that in the Bill.
Two years ago, the Minister then responsible for regeneration, the right hon. Member for Ealing, Acton (Sir G. Young), promised regional regeneration statements for each area. They never arrived. Such statements of aims are crucial if there is to be clarity and certainty about how those requesting funds are to be assessed. The notion that everything should be left to the market is unacceptable.
I believe that there must be a role for entrepreneurs to suggest local projects with which they wish to be involved, provided that they obtain the support of local government.

Mr. Dover: Will the hon. Gentleman give way?

Mr. Vaz: No.
Far too often, the present Government have been obsessed with organisational matters rather than the more important question of what the objectives of those organisations should be. We prefer substance to form. We want things to be achieved, not just talked about.
English Partnerships is a classic example—an organisation in search of a role. I pay tribute to the work of David Taylor, its first chief executive, who had to resign for personal reasons last week. Had it not been for his personality and ability, English Partnerships would have gone adrift some time ago. If there is a need for such an agency, its role must be clearly defined and its regional structure democratic and accountable.
The demise of the urban district councils was planned many, many years ago, yet—alas—the Government do not have a co-ordinated approach as to what is to succeed them. Nowhere is that lack of vision more apparent than in the Government's attitude to the east of London. The Canary Wharf development and the Thames gateway initiative foreshadow a city to the east. As I am sure my hon. Friend the Member for Newham, North-West (Mr. Banks) would agree, the development of east London is long overdue. Ministers have not worked to bring together the projects, organisations and local authorities to provide a cohesive policy.
The Bill is entitled the Housing Grants, Construction and Regeneration Bill, yet not one homeless family will be housed as a result of it. Not one extra construction job will be created; not one area will be regenerated. Bereft of ideas and besieged on all sides, the Government limp on to defeat—if not tonight, then certainly at the polls. It is a hopeless Bill, from a hopeless Government.

The Parliamentary Under-Secretary of State for the Environment (Mr. James Clappison): I welcome the opportunity to respond to the debate on an important Bill

which introduces significant reforms. In opening the debate, the Minister for Construction, Planning and Energy Efficiency, my hon. Friend the Member for West Hertfordshire (Mr. Jones), identified the areas that will benefit from the reforms. In the construction industry, much needed and much anticipated reforms will deliver a more competitive industry with wider benefits to the economy and important benefits to construction clients.
The Bill provides a more flexible system of renovation grants, with more discretion for local authorities. It introduces important reforms to the architects profession and to the single regeneration budget. Those significant reforms have been widely welcomed outside the Chamber.
I found the response of the hon. Member for Holborn and St. Pancras (Mr. Dobson) somewhat disappointing in the face of those significant reforms. He began his speech by paying tribute to the hon. Member for Greenwich (Mr. Raynsford), whom he described as truly learned. I am conscious of the natural modesty of the hon. Member for Greenwich and I do not think that it is fair or proper for me to offer a judgment in that regard. However, having described his hon. Friend as more learned than he, it is fair to say that the hon. Member for Holborn and St. Pancras did little to disprove that proposition in the remainder of his speech. His speech was not learned, judicial or legal—in fact, it reminded me of the work of a dodgy builder.
Like any dodgy builder, the hon. Gentleman began with a job lot left over from his previous speech. Many of his remarks seemed to come from his contribution to the Housing Bill debate and properly belonged there. As his speech progressed, it became clear that his material had been rejected. He made the most bogus of all bogus comparisons by contrasting council house building now with the building rate under the last Labour Government. He knows perfectly well that, in so doing, he is not comparing like with like. He ignores the important provision that the Government make in a wide variety of other ways, including through housing associations.
I shall not be tempted further down that path as I do not wish to stray from the subject of this important debate. The hon. Gentleman committed another sin of the dodgy builder: he started constructing his argument without any idea of what he wanted to achieve—he gave no indication of what he intended to build. When it came to the point that really mattered—whether he would make a commitment to meet demand-led mandatory grants—the hon. Gentleman was silent. Hon. Members will have noted the obvious way in which he avoided that commitment.
The hon. Gentleman's evasion was all the more striking in the face of the clarion calls from the hon. Members for Pendle (Mr. Prentice), for Burnley (Mr. Pike), for Newham, North-East (Mr. Timms), for Dudley, West (Mr. Pearson) and many others who asked for more resources to meet demand-led mandatory grants. The hon. Member for Holborn and St. Pancras was not prepared to give that commitment. He gave no indication of his intentions and he remained silent and embarrassed when a commitment was sought.
The hon. Gentleman then called for close scrutiny of the Bill in Committee. We did not get off to a promising start when he referred to the subject of adjudication and entirely ignored the clear commitment given by my hon.


Friend in opening the debate. My hon. Friend made it quite clear that we do not intend adjudication to be final and binding. The hon. Gentleman somehow failed to hear my hon. Friend say that we intend to propose that parties should be required to abide by an adjudicator's decision until practical completion of the contract, but that thereafter they may reopen the dispute.

Mr. Dobson: If the Minister looks at the Hansard, he will find that I said that the Government's original proposition would have made the adjudicator give a decision that was not just binding, but final. I was not talking about the Minister's comments. I said that we cannot believe a word that Ministers say at the Dispatch Box because Labour Members remember the Government's promise not to privatise Railtrack.

Mr. Clappison: I am afraid that the hon. Gentleman's position has not improved. He called for scrutiny in Committee. What is the point of calling for scrutiny unless it relates to what is currently proposed?
The hon. Member for Leicester, East (Mr. Vaz) compared the hon. Member for Holborn and St. Pancras with a boxer who had scored a knock-out. Although it might do wonders for the hon. Member for Leicester, East by providing him with a future career as a boxing promoter, as a boxing fan and member of the public, I would not buy tickets on the strength of that comment.
The hon. Member for Leicester, East said something interesting at the end of his speech. If I heard him aright, he said that Labour would provide no extra money for the single regeneration budget. I take that to be the definite intention behind the hon. Gentleman's speech—and he seems to accept it. He did not say what would happen to the single regeneration budget if there were more bids than there were resources available. That is another interesting question that remains open.
We heard some excellent speeches from my hon. Friends. My hon. Friend the Member for Chipping Barnet (Sir S. Chapman) spoke with great authority as a chartered architect. He described himself as belonging to an endangered species as he is both an architect and a Member of Parliament. He could not think of any other hon. Members who were architects. I remind him that Sir Christopher Wren was also an architect and a Member of Parliament—a comparison not entirely uncalled for in the circumstances.
My hon. Friend the Member for Chipping Barnet was absolutely right, as were other hon. Members who spoke from professional experience, when he talked about the problems in the construction industry, which has been plagued by disputes and late payments. He was absolutely right to say that cash flow was vital and that the industry could be more efficient, more competitive and less adversarial. He was entirely right in his comments and in his support of the Bill.
The right hon. Member for Chesterfield (Mr. Benn) made a speech that the hon. Member for Leicester, East described as interesting in a rather chilling way. The right hon. Gentleman is a senior member of the House and I always enjoy his speeches, although I do not often agree with them. When he called for common ownership of land, my enjoyment of his speech was somewhat greater

than that of his colleagues on the Opposition Front Bench. Their pleasure and enjoyment of his speech seemed to vary inversely with the feeling of pleasure of those on the Back Benches surrounding the right hon. Gentleman when he spoke about common ownership of land. His comments seemed to cause a certain amount of discomfort.
My hon. Friend the Member for Bolton, North-East (Mr. Thurnham), who also has a long-term interest in the construction industry, made a constructive speech. He highlighted his connection with the industry through the Electrical Contractors Association. He asked an important question in respect of process work—whether maintenance and repair work would be included. I am pleased to tell him that building and civil engineering repair work will be included, as will maintenance work in so as far as it involves construction operations such as repair, restoration and redecoration. I can also assuage his concern about design work, as clause 104 covers the design work of all professionals in the construction industry.
The House will be aware of my hon. Friend's concern for disabled people. He referred to the part M of the building regulations. He will know that we have received a large number of representations on that and we currently considering them.
The hon. Member for Christchurch (Mrs. Maddock) also welcomed many of our proposals, particularly in respect of the disabled facilities grant. She recognised the assistance that the Bill will provide through the extra discretionary help that will be available and the changes to the means test that will provide assistance to more disabled people. She also welcomed the extension of the grant to those living in park homes and mobile homes.
The hon. Lady mentioned the English house condition survey, to which I hope to refer later, and made some comments about unfit homes in the private rented sector. The most recent English house condition survey covering the period from 1986 to 1991 shows a reduction in the number of unfit homes in the private rented sector. Contrary to what the hon. Lady said, much of what has been brought about by way of deregulation has improved the condition of properties in the private rented sector.

Mrs. Maddock: Perhaps I can clarify that point. I quoted from a further survey by the National Home Improvement Council which showed that the report that the Minister has just mentioned was not holding up and that conditions were getting worse.

Mr. Clappison: The hon. Lady placed reliance elsewhere in her speech on the English house condition survey, which clearly showed a big improvement in the private rented sector.

Mr. Ainger: indicated dissent.

Mr. Clappison: It did.

Mr. Dobson: My hon. Friend is the expert.

Mr. Clappison: I would not rely too much on that proposition, in view of the hon. Gentleman's other propositions.
My hon. Friend the Member for Chorley (Mr. Dover) also made an important contribution. He paid tribute to the Urban Development Corporation, which he helped to bring about, and spoke from his experience as chief executive of the National Building Agency. My hon. Friend was clear about the benefits that the Bill will bring to the construction industry.
My hon. Friend the Member for Wyre Forest (Mr. Coombs) gave the Bill a general welcome. We greatly hope that the availability of adjudication will prove an effective method for resolving disputes, and will prevent many disputes arising in the first place—thus reducing the amount of litigation. My hon. Friend the Member for Reading, East (Sir G. Vaughan) made a pertinent speech. We will consider the implementation date most sympathetically.
The proposed reforms in respect of the construction industry have been welcomed in all parts of the House, especially by my right hon. and hon. Friends. I add to the tributes paid by many hon. Members to the work of Sir Michael Latham. The House would do well to remember Sir Michael's injunction to take reform seriously and pursue it speedily. His report called for the Government to take the initiative:
The initiative must be taken by Government, in conjunction with major clients and other leaders of the construction process. If this opportunity is not taken, it may not recur for many years, and a new report may be commissioned in the year 2024 to go over the same ground again.
The Government are taking the initiative, in all the ways that my hon. Friends have explained, through the working group and important reforms on payment and adjudication, which have been welcomed throughout the House. I hope that the hon. Member for Holborn and St. Pancras, in his blanket opposition to the Bill, will not do anything to undermine those important reforms.
With regard to home renovation, the hon. Member for Holborn and St. Pancras spoke at length about the effects of the conditions relating to unfit properties. We are also concerned about such properties, but the hon. Gentleman should bear in mind that the English house conditions survey showed a substantial reduction of 7 per cent. in the number of unfit occupied private sector homes between 1986 and 1991. The hon. Gentleman rightly referred to changes in the criteria, but they were made less stringent. If the hon. Gentleman will compare the figures for 1981 and 1991, he will find a substantial reduction in the number of unfit properties over that period. After 10 years of Conservative government, the position was much better than in 1981, after five years of Labour Government. The situation in 1991 was 50 per cent. better.
The hon. Member for Holborn and St. Pancras should remember also that home owners must in the first instance take responsibility for their properties, and that is governed by general economic conditions. There has been a big improvement under this Government. Many more families have homes which have the benefit of double glazing, central heating, indoor toilets and other basic facilities than when Labour last held office. At that time, fewer than half the dwellings had central heating, and nearly 5 per cent. of properties were without inside toilets. There was little improvement during those years. Families did not have the basic facilities that they take for granted today. The improvement has been brought about by a healthy, well-managed economy which gives prosperity

to home owners, brings the benefits of sustained economic growth, low inflation and low interest rates and allows people to invest in their own homes.
There have been substantial improvements and we shall bring about more improvements as a result of the Bill. The people of this country are better housed in better conditions than ever before.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 288, Noes 257.

Division No. 120]
[10.00 pm


AYES


Ainsworth, Peter (East Surrey)
Currie, Mrs Edwina (S D'by'ire)


Aitken, Rt Hon Jonathan
Curry, David (Skipton & Ripon)


Alexander, Richard
Davies, Quentin (Stamford)


Alison, Rt Hon Michael (Selby)
Davis, David (Boothferry)


Allason, Rupert (Torbay)
Day, Stephen


Amess, David
Deva, Nirj Joseph


Arbuthnot, James
Devlin, Tim


Arnold, Jacques (Gravesham)
Dicks, Terry


Atkins, Rt Hon Robert
Dorrell, Rt Hon Stephen


Atkinson, Peter (Hexham)
Douglas-Hamilton, Lord James


Baker, Nicholas (North Dorset)
Dover, Den


Baldry, Tony
Duncan, Alan


Banks, Matthew (Southport)
Duncan Smith, Iain


Banks, Robert (Harrogate)
Dunn, Bob


Bates, Michael
Durant, Sir Anthony


Batiste, Spencer
Elletson, Harold


Bellingham, Henry
Emery, Rt Hon Sir Peter


Bendall, Vivian
Evans, David (Welwyn Hatfield)


Beresford, Sir Paul
Evans, Jonathan (Brecon)


Body, Sir Richard
Evans, Nigel (Ribble Valley)


Bonsor, Sir Nicholas
Evans, Roger (Monmouth)


Booth, Hartley
Evennett, David


Boswell, Tim
Faber, David


Bottomley, Peter (Eltham)
Fabricant, Michael


Bottomley, Rt Hon Virginia
Fenner, Dame Peggy


Bowis, John
Field, Barry (Isle of Wight)


Boyson, Rt Hon Sir Rhodes
Forman, Nigel


Brandreth, Gyles
Forsythe, Clifford (S Antrim)


Brazier, Julian
Forth, Eric


Bright, Sir Graham
Fowler, Rt Hon Sir Norman


Brooke, Rt Hon Peter
Fox, Dr Liam (Woodspring)


Brown, M (Brigg & Cl'thorpes)
Fox, Rt Hon Sir Marcus (Shipley)


Browning, Mrs Angela
Freeman, Rt Hon Roger


Bruce, Ian (South Dorset)
French, Douglas


Budgen, Nicholas
Fry, Sir Peter


Burt, Alistair
Gale, Roger


Butcher, John
Gallie, Phil


Butler, Peter
Gardiner, Sir George


Butterfill, John
Garnier, Edward


Carlisle, John (Luton North)
Gill, Christopher


Carlisle, Sir Kenneth (Lincoln)
Gillan, Cheryl


Carrington, Matthew
Goodlad, Rt Hon Alastair


Carttiss, Michael
Goodson-Wickes, Dr Charles


Cash, William
Gorman, Mrs Teresa


Channon, Rt Hon Paul
Gorst, Sir John


Chapman, Sir Sydney
Grant, Sir A (SW Cambs)


Churchill, Mr
Greenway, Harry (Ealing N)


Clappison, James
Greenway, John (Ryedale)


Clark, Dr Michael (Rochford)
Griffiths, Peter (Portsmouth, N)


Clarke, Rt Hon Kenneth (Ru'clif)
Grylls, Sir Michael


Clifton-Brown, Geoffrey
Gummer, Rt Hon John Selwyn


Coe, Sebastian
Hague, Rt Hon William


Colvin, Michael
Hamilton, Rt Hon Sir Archibald


Congdon, David
Hamilton, Neil (Tatton)


Coombs, Anthony (Wyre For'st)
Hampson, Dr Keith


Coombs, Simon (Swindon)
Hanley, Rt Hon Jeremy


Cormack, Sir Patrick
Hannam, Sir John


Couchman, James
Hargreaves, Andrew


Cran, James
Harris, David






Haselhurst, Sir Alan
Newton, Rt Hon Tony


Hawkins, Nick
Nicholls, Patrick


Hawksley, Warren
Nicholson, David (Taunton)


Hayes, Jerry
Norris, Steve


Heald, Oliver
Onslow, Rt Hon Sir Cranley


Heath, Rt Hon Sir Edward
Oppenheim, Phillip


Heathcoat-Amory, Rt Hon David
Ottaway, Richard


Hendry, Charles
Page, Richard


Heseltine, Rt Hon Michael
Paice, James


Hicks, Robert
Patnick, Sir Irvine


Higgins, Rt Hon Sir Terence
Patten, Rt Hon John


Hill, James (Southampton Test)
Pattie, Rt Hon Sir Geoffrey


Horam, John
Pawsey, James


Hordern, Rt Hon Sir Peter
Pickles, Eric


Howard, Rt Hon Michael
Porter, Barry (Wirral S)


Howell, Rt Hon David (G'dford)
Porter, David (Waveney)


Howell, Sir Ralph (N Norfolk)
Portillo, Rt Hon Michael


Hughes, Robert G (Harrow W)
Rathbone, Tim


Hunt, Rt Hon David (Wirral W)
Redwood, Rt Hon John


Hunt, Sir John (Ravensbourne)
Renton, Rt Hon Tim


Hunter, Andrew
Richards, Rod


Hurd, Rt Hon Douglas
Riddick, Graham


Jack, Michael
Rifkind, Rt Hon Malcolm


Jackson, Robert (Wantage)
Robathan, Andrew


Jenkin, Bernard
Roberts, Rt Hon Sir Wyn


Jessel, Toby
Robertson, Raymond (Ab'd'n S)


Johnson Smith, Sir Geoffrey
Robinson, Mark (Somerton)


Jones, Gwilym (Cardiff N)
Ross, William (E Londonderry)


Jones, Robert B (W Hertfdshr)
Rowe, Andrew (Mid Kent)


Kellett-Bowman, Dame Elaine
Rumbold, Rt Hon Dame Angela


Key, Robert
Sainsbury, Rt Hon Sir Timothy


King, Rt Hon Tom
Scott, Rt Hon Sir Nicholas


Kirkhope, Timothy
Shaw, David (Dover)


Knapman, Roger
Shaw, Sir Giles (Pudsey)


Knight, Mrs Angela (Erewash)
Shephard, Rt Hon Gillian


Knight, Rt Hon Greg (Derby N)
Shepherd, Sir Colin (Hereford)


Knight, Dame Jill (Bir'm E'st'n)
Shepherd, Richard (Aldridge)


Knox, Sir David
Shersby, Sir Michael


Kynoch, George (Kincardine)
Skeet, Sir Trevor


Lait, Mrs Jacqui
Smith, Tim (Beaconsfield)


Lamont, Rt Hon Norman
Soames, Nicholas


Lang, Rt Hon Ian
Spicer, Sir James (W Dorset)


Lawrence, Sir Ivan
Spicer, Sir Michael (S Worcs)


Legg, Barry
Spink, Dr Robert


Leigh, Edward
Sproat, Iain


Lennox-Boyd, Sir Mark
Squire, Robin (Hornchurch)


Lester, Sir James (Broxtowe)
Stanley, Rt Hon Sir John


Lidington, David
Steen, Anthony


Lilley, Rt Hon Peter
Stephen, Michael


Lloyd, Rt Hon Sir Peter (Fareham)
Stern, Michael


Lord, Michael
Stewart, Allan


Luff, Peter
Streeter, Gary


Lyell, Rt Hon Sir Nicholas
Sumberg, David


MacKay, Andrew
Sweeney, Walter


Maclean, Rt Hon David
Sykes, John


McLoughlin, Patrick
Tapsell, Sir Peter


Madel, Sir David
Taylor, Ian (Esher)


Maitland, Lady Olga
Taylor, John M (Solihull)


Major, Rt Hon John
Taylor, Sir Teddy (Southend, E)


Malone, Gerald
Temple-Morris, Peter


Mans, Keith
Thomason, Roy


Marland, Paul
Thompson, Sir Donald (C'er V)


Marshall, Sir Michael (Arundel)
Thompson, Patrick (Norwich N)


Martin, David (Portsmouth S)
Thumham, Peter


Mates, Michael
Townend, John (Bridlington)


Mawhinney, Rt Hon Dr Brian
Townsend, Cyril D (Bexl'yh'th)


Mayhew, Rt Hon Sir Patrick
Tredinnick, David


Merchant, Piers
Trend, Michael


Mills, Iain
Trotter, Neville


Mitchell, Andrew (Gedling)
Twinn, Dr Ian


Mitchell, Sir David (NW Hants)
Vaughan, Sir Gerard


Molyneaux, Rt Hon Sir James
Viggers, Peter


Monro, Rt Hon Sir Hector
Waldegrave, Rt Hon William


Montgomery, Sir Fergus
Walden, George


Nelson, Anthony
Walker, Bill (N Tayside)


Neubert, Sir Michael
Waller, Gary





Ward, John
Wilshire, David


Wardle, Charles (Bexhill)
Winterton, Mrs Ann (Congleton)


Waterson, Nigel
Winterton, Nicholas (Macc'f'ld)


Watts, John
Wolfson, Mark


Wells, Bowen
Wood, Timothy


Whitney, Ray
Yeo, Tim


Whittingdale, John
Young, Rt Hon Sir George


Widdecombe, Ann



Wiggin, Sir Jerry
Tellers for the Ayes:


Wilkinson, John
Mr. Derek Conway and Mr. Simon Burns.


Willetts, David





NOES


Abbott, Ms Diane
Dewar, Donald


Adams, Mrs Irene
Dixon, Don


Ainger, Nick
Dobson, Frank


Ainsworth, Robert (Cov'try NE)
Donohoe, Brian H


Allen, Graham
Dowd, Jim


Alton, David
Dunwoody, Mrs Gwyneth


Anderson, Donald (Swansea E)
Eagle, Ms Angela


Armstrong, Hilary
Eastham, Ken


Ashdown, Rt Hon Paddy
Etherington, Bill


Ashton, Joe
Evans, John (St Helens N)


Banks, Tony (Newham NW)
Fatchett, Derek


Barnes, Harry
Faulds, Andrew


Barron, Kevin
Field, Frank (Birkenhead)


Battle, John
Fisher, Mark


Beckett, Rt Hon Margaret
Flynn, Paul


Benn, Rt Hon Tony
Foster, Rt Hon Derek


Bennett, Andrew F
Foster, Don (Bath)


Benton, Joe
Foulkes, George


Bermingham, Gerald
Fraser, John


Betts, Clive
Fyfe, Maria


Blunkett, David
Galbraith, Sam


Boateng, Paul
Galloway, George


Bradley, Keith
Gapes, Mike


Bray, Dr Jeremy
Garrett, John


Brown, N (N'c'tle upon Tyne E)
George, Bruce


Bruce, Malcolm (Gordon)
Gerrard, Neil


Burden, Richard
Gilbert, Rt Hon Dr John


Byers, Stephen
Godman, Dr Norman A


Caborn, Richard
Godsiff, Roger


Callaghan, Jim
Golding, Mrs Llin


Campbell, Mrs Anne (C'bridge)
Gordon, Mildred


Campbell, Menzies (Fife NE)
Graham, Thomas


Campbell, Ronnie (Blyth V)
Griffiths, Nigel (Edinburgh S)


Canavan, Dennis
Griffiths, Win (Bridgend)


Cann, Jamie
Grocott, Bruce


Carlile, Alexander (Montgomery)
Gunnell, John


Chidgey, David
Hain, Peter


Chisholm, Malcolm
Hall, Mike


Church, Judith
Hanson, David


Clapham, Michael
Harman, Ms Harriet


Clark, Dr David (South Shields)
Harvey, Nick


Clarke, Eric (Midlothian)
Hattersley, Rt Hon Roy


Clarke, Tom (Monklands W)
Henderson, Doug


Clelland, David
Heppell, John


Clwyd, Mrs Ann
Hill, Keith (Streatham)


Cohen, Harry
Hoey, Kate


Connarty, Michael
Hogg, Norman (Cumbernauld)


Corbett, Robin
Home Robertson, John


Corbyn, Jeremy
Hood, Jimmy


Corston, Jean
Hoon, Geoffrey


Cousins, Jim
Howarth, Alan (Strat'rd-on-A)


Cox, Tom
Howarth, George (Knowsley North)


Cunliffe, Lawrence
Howells, Dr Kim (Pontypridd)


Cunningham, Jim (Covy SE)
Hoyle, Doug


Cunningham, Rt Hon Dr John
Hughes, Kevin (Doncaster N)


Dalyell, Tam
Hughes, Robert (Aberdeen N)


Darling, Alistair
Hughes, Roy (Newport E)


Davidson, Ian
Hughes, Simon (Southwark)


Davies, Bryan (Oldham C'tral)
Hutton, John


Davies, Chris (L'Boro & S'worth)
Illsley, Eric


Davies, Rt Hon Denzil (Llanelli)
Ingram, Adam


Davies, Ron (Caerphilly)
Jackson, Glenda (H'stead)


Denham, John
Jackson, Helen (Shef'ld, H)






Jamieson, David
Morris, Estelle (B'ham Yardley)


Janner, Greville
Morris, Rt Hon John (Aberavon)


Jenkins, Brian (SE Staff)
Mowlam, Marjorie


Johnston, Sir Russell
Mudie, George


Jones, Barry (Alyn and D'side)
Mullin, Chris


Jones, Ieuan Wyn (Ynys Môn)
Murphy, Paul


Jones, Jon Owen (Cardiff C)
O'Brien, Mike (N W'kshire)


Jones, Lynne (B'ham S O)
O'Brien, William (Normanton)


Jones, Martyn (Clwyd, SW)
O'Hara, Edward


Jones, Nigel (Cheltenham)
Olner, Bill


Jowell, Tessa
O'Neill, Martin


Keen, Alan
Orme, Rt Hon Stanley


Kennedy, Charles (Ross, C&S)
Parry, Robert


Kennedy, Jane (L'pool Br'dg'n)
Pearson, Ian


Khabra, Piara S
Pendry, Tom


Kilfoyle, Peter
Pike, Peter L


Kirkwood, Archy
Pope, Greg


Lestor, Joan (Eccles)
Powell, Ray (Ogmore)


Litherland, Robert
Prentice, Bridget (Lew'm E)


Livingstone, Ken
Prentice, Gordon (Pendle)


Lloyd, Tony (Stretford)
Prescott, Rt Hon John


Llwyd, Elfyn
Primarolo, Dawn


Lynne, Ms Liz
Quin, Ms Joyce


McAllion, John
Radice, Giles


McAvoy, Thomas
Randall, Stuart


McCartney, Ian
Raynsford, Nick


McFall, John
Reid, Dr John


McKelvey, William
Rendel, David


Mackinlay, Andrew
Robinson, Geoffrey (Co'try NW)


McLeish, Henry
Roche, Mrs Barbara


McMaster, Gordon
Rogers, Allan


McNamara, Kevin
Rooker, Jeff


MacShane, Denis
Rooney, Terry


McWilliam, John
Ross, Ernie (Dundee W)


Madden, Max
Rowlands, Ted


Maddock, Diana
Ruddock, Joan


Mandelson, Peter
Sedgemore, Brian


Marek, Dr John
Sheerman, Barry


Marshall, David (Shettleston)
Sheldon, Rt Hon Robert


Marshall, Jim (Leicester, S)
Shore, Rt Hon Peter


Martlew, Eric
Short, Clare


Maxton, John
Simpson, Alan


Meacher, Michael
Skinner, Dennis


Michael, Alun
Smith, Andrew (Oxford E)


Michie, Bill (Sheffield Heeley)
Smith, Chris (Isl'ton S & F'sbury)


Michie, Mrs Ray (Argyll & Bute)
Smith, Llew (Blaenau Gwent)


Milburn, Alan
Snape, Peter


Miller, Andrew
Soley, Clive


Moonie, Dr Lewis
Spearing, Nigel


Morgan, Rhodri
Spellar, John


Morley, Elliot
Steel, Rt Hon Sir David


Morris, Rt Hon Alfred (Wy'nshawe)
Steinberg, Gerry





Stevenson, George
Walker, Rt Hon Sir Harold


Stott, Roger
Walley, Joan


Strang, Dr. Gavin
Wardell, Gareth (Gower)


Straw, Jack
Watson, Mike


Sutcliffe, Gerry
Wicks, Malcolm


Taylor, Mrs Ann (Dewsbury)
Wigley, Dafydd



Williams, Rt Hon Alan (Sw'n W)


Taylor, Rt Hon John D (Strgfd)
Williams, Alan W (Carmarthen)


Taylor, Matthew (Truro)
Worthinqton, Tony


Timms, Stephen
Wray, Jimmy


Tipping, Paddy
Wright, Dr Tony


Touhig, Don
Young, David (Bolton SE)


Trickett, Jon



Turner, Dennis
Tellers for the Noes:


Tyler, Paul
Ms Ann Coffey and Ms Janet Anderson.


Vaz, Keith

Question accordingly agreed to.

Bill read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 61 (Committal of Bills).

Orders of the Day — HOUSING GRANTS, CONSTRUCTION AND REGENERATION BILL [Lords] [MONEY]

Queen's recommendation having been signified—

Motion made, and Question put forthwith, pursuant to Standing Order No.50A(1)(a),

That, for the purposes of any Act resulting from the Housing Grants, Construction and Regeneration Bill [Lords], it is expedient to authorise—

(a) the payment out of money provided by Parliament of—
(i) any expenses of the Secretary of State incurred in consequence of the Act,
(ii) any increase attributable to the Act in the sums payable out of money so provided under any other enactment;

(b) any increase attributable to the Act in the sums payable out of the Consolidated Fund or the National Loans Fund under any other enactment; and
(c) the payment into the Consolidated Fund or the National Loans Fund of any sums received under or by virtue of the Act.—[Mr. Wells.]

Question agreed to.

Orders of the Day — Civil Service Pension Schemes

The Parliamentary Secretary, Office of Public Service (Mr. David Willetts): I beg to move,
That the draft Contracting Out (Administration of Civil Service Pension Schemes) Order 1996, which was laid before this House on 25th March, be approved.
The order is being introduced as part of the Government's drive to improve the quality of public services and to develop better, more efficient methods of delivering those services. The Government's "Competing for Quality" programme has produced a sea change in the way in which public services are delivered.
Competition has led to better value for money for the taxpayer. In the three years since the "Competing for Quality" programme has been operating, Departments have reviewed in all £2.6 billion-worth of activities, producing savings to the taxpayer of well over £500 million—in excess of 20 per cent. on average. Competition has also produced higher standards of service for the customer.
The order is to be made under section 69 of the Deregulation and Contracting Out Act 1994. It specifies administration of the principal civil service pension scheme and associated schemes as a function that external contractors may be authorised to undertake. At present, under the Superannuation Act 1972, only public servants may undertake that function.
Section 1(1) of the Superannuation Act provides that the Minister responsible for the civil service may make, maintain and administer superannuation schemes for persons employed in the civil service and related organisations. Responsibility for day-to-day administration of civil service pension and compensation arrangements is formally delegated under the 1972 Act to employing Departments and agencies. They can either perform the full administration function in house or buy in services from other providers in government.
The order will make it possible for private sector providers to compete for the business and thus extend the choice available to employing Departments and agencies. The civil service unions and the Civil Service Pensioners Alliance have been formally consulted on the draft order.

Mr. Frank Field: Have they agreed?

Mr. Willetts: The anxieties expressed by the civil service unions and the pensioners alliance focused particularly on the future value of their pensions—a subject on which we have been able to give them cast-iron assurances, to which I shall turn later.

Mr. Field: While the Government are the proper custodian of the public interest here, the whole push of Government policy is to take into account the consumer's views about public services. The consumers in this case are civil servants and retired civil servants. To what extent do those two groups support the changes that the Government propose this evening?

Mr. Willetts: There is certainly widespread recognition among pensioners that the service that they receive is in general of a good standard, but it does not follow from that that it is not possible to improve further on standards. If it is possible, of course we look to do so.
An efficiency scrutiny of the civil service pension schemes recommended:
Departments should be encouraged to market test their pension operations.
Approval of this order will permit Departments to test this area of activity against alternative sources in the market. The aim is to give improved quality of service to scheme members and to provide better value for money for the taxpayer. Decisions on the timing and other arrangements for market tests will be the responsibility of the individual Departments. It will be open to existing service providers to compete on a value for money basis.

Mr. John Garrett: In what areas does the Minister envisage the quality of service being improved?

Mr. Willetts: If we knew all the ways in which the quality of service would be improved, we would not need to engage in a market test. One of the purposes of a market test is to discover whether there are better ways of doing things and to take advantage of technological improvements, from which all parts of the service will be able to benefit when we bring in the new computer software package that will be available from July. The improved software package will make extra quality of service possible that currently is not possible. We shall find out which organisations can best deliver that quality of service.

Ms Judith Church: What criteria will be used in determining who will administer the pension scheme in the future? On what criteria will the Minister judge the bids?

Mr. Willetts: The basic criteria will be the same as other cases in which we apply the "Competing for Quality" initiative—quality of service, efficiency of service delivery and scope for savings in the cost of administration of the public service. If existing in-service providers are as good as their defenders maintain, they should be able to win contracts as a result of the initiative. We do not rule out in-service bids.
I should explain that the order relates solely to administration of the civil service schemes. Administration covers such activities as scheme induction, calculation of benefits, answering inquiries, maintenance of personnel data, processing applications to buy added years or pay additional voluntary contributions and paying pensions.

Mr. Tim Devlin: On that basis, can my hon. Friend give me an assurance that the value of the funds invested on behalf of the civil service pensions will not be affected by the proposed order, and that we are talking solely about the administration of the scheme rather than the benefits which will be available to members?

Mr. Willetts: While the civil service pension schemes are not themselves funded, I can give my hon. Friend the assurance that he seeks on the fundamental point that the value of the pensions earned by civil servants will be completely unaffected by these changes. My hon. Friend is right to draw attention to that fundamental issue.
A number of hon. Members have written to Ministers on behalf of constituents and local branches of the Civil Service Pensioners Alliance expressing concern about the implications of the order for both the active and retired membership of the schemes. I can reassure the House on that, because occupational pensions for civil servants will continue to be provided under the civil service pension scheme. The pensions of scheme members will not be affected.
Competitive tendering for the administration function involves no changes in the benefits provided by the scheme and the pensions of retired members will continue to be increased annually in accordance with the Pensions (Increase) Acts. The Minister for the Civil Service will remain responsible to the House for the development of the scheme and also for the rules setting out the benefits and entitlements of scheme members. There is no pension fund, so there are no fund assets which could be put at risk. Cabinet Office Ministers will continue to account to Parliament for expenditure on the civil superannuation vote.
A contractor will not be allowed to advise civil servants on whether to join or leave the scheme or about the merits of individuals making additional voluntary contributions or buying added years. Explanatory booklets for scheme members will continue to be published by my Department. Steps will be taken to maintain confidentiality of personnel records. Computerised records will, of course, be covered by the Data Protection Act 1984. In any market test, appropriate service standards for scheme administration of the principal civil service pension scheme will be set. Any contract will require a standard of service at least as high as that under existing arrangements. Those standards will apply from the outset.
A new pensions administration software package tailored to the requirements of the civil service schemes is being procured by my Department. It will become available in July. It will enable the adoption of more efficient and innovative approaches to scheme administration, such as a one-stop shop for serving scheme members. It will enable service levels to scheme members to be raised while significantly reducing cost. The software will be portable between providers, enabling new players, including small businesses, to enter the marketplace. It will make market testing particularly effective.
A series of competitive tendering exercises will offer the work in manageable parcels. That will encourage new and existing third-party administrators to compete effectively for the business and so offer Departments and agencies several alternative suppliers from which to choose. In conclusion, I quote from the Treasury and Civil Service Select Committee:
The quest for greater effectiveness and efficiency in the Civil Service is an unending one; the requirement to maximise the return from finite resources will not go away.

Mr. Garrett: How can it be more efficient to split the administration of the civil service pension scheme over a multiplicity of small or medium-sized contractors instead of being organised at one central point as it is now? Secondly, how many people are employed, and are therefore likely to face redundancy, in administering the existing system?

Mr. Willetts: First, the administration of the schemes is the responsibility of Departments. One possibility that

results from our "Competing for Quality" initiative is for new consortia to be assembled with several Departments getting together. There is no reason why there should be any fragmentation. On the second point, the overall pensions administration, including both entitlements and payments out, involves approximately 800 staff. I am not in a position to give any figures for redundancies. We may well find that the in-house providers, if they are as good as their defenders say, win the contracts.
I believe that this proposal will raise standards of service to scheme members and secure best value for money in the administration of the scheme, while the pension entitlement of scheme members will not be affected. I commend the draft order to the House.

Mr. Derek Foster: The order concerns the administration of the principal civil service pension scheme, which has about 500,000 active members, 520,000 pensioners and 170,000 preserved pensions. May I be so indelicate as to remind the Minister that many of those members live in marginal seats? After the humiliation of the South-East Staffordshire by-election and their severe drubbing at the local elections, a reasonable person might think that the Government would make moves to reassure such an important group of voters. Not a bit of it. They insist on flouting Lord Healey's first law of holes, "If you're in a hole, stop digging." The Government, egged on by the Minister in his ceaseless quest for more productivity, are throwing out the shovels and bringing in the excavators.
Their pensions are important investments to civil servants—next to their homes, the most important investment. The Minister told the House that the order will not affect their pensions in any way, merely the administration of the pensions. He did not quite say that civil service pensions are safe in the Government's hands but I am certain that he will when he replies. The evil Opposition and the wicked civil service unions are cruelly stirring up needless alarm.
I must tell the Minister that there is no need to stir up alarm. Civil servants are already alarmed. Why? They do not trust the Government. That should not surprise the Minister. No one trusts this Government, not even their own Back Benchers.

Dame Elaine Kellett-Bowman: Oh, yes we do.

Mr. Foster: At last, a loyal Government supporter—a miracle to behold and to be congratulated.
The Minister will have seen the ICM poll published in the Observer last Sunday. It shows that insecurity has risen sharply during the 1990s and has spread to people of all ages, regions and social groups. He should know that insecurity is widespread throughout the civil service. The MORI poll is evidence, as is the recent poll of civil servants published in the Observer. In that poll, 92 per cent. believed that civil service morale was quite or very bad and 73 per cent. would not advise the next generation to join the civil service. Even Sir Robin Butler himself, in an interview in the Observer last November, admitted that the changes sweeping through Whitehall had sapped morale and created a climate of insecurity.
Since 1979, 250,000 civil service jobs have been lost. The civil service has been market tested, contracted out and privatised. Who can be surprised if there is a climate of insecurity? Civil servants know that their jobs are not safe in the Government's hands. How can they be expected to trust the Government with their pensions?
As the Minister said, the Council of Civil Service Unions, which represents the majority of people in the scheme, has been consulted, as has the Civil Service Pensioners Alliance, which has more than 70,000 members among retired civil servants. Both organisations are vehemently opposed to the Government's proposals. Why did the Minister tell us that? There is no support for the order among civil servants, civil service pensioners or deferred civil service pensioners.
Despite Government assurances, which the Minister has repeated tonight, civil servants and civil service pensioners remain concerned that the order is an early stage in the process of breaking up and destroying the principle civil service pension scheme. Already, Public Service Ministers have delegated to Departments responsibility for pensions administration. The order will allow them to contract out the work to private-sector organisations. Fortunately, as the Minister said, the order relates only to the administration of the pension scheme and not to Public Service Ministers' responsibility to make and maintain the scheme. However, with their lack of trust in the Government, civil servants fear that that will be the next step.
It is clear that the term administration of the scheme relates both to making awards and payment of pensions. Consequently, the order will remove the present statutory obstacles to the privatisation of that part of the Office of Her Majesty's Paymaster General that pays public sector pensions. Without the order, a privatised Paymaster—the Government intend to privatise it—would be unable either to undertake administration work or to pay public service pensions.
The Minister extensively quoted the 1992 efficiency scrutiny to justify the proposals, but it contains a considerable amount of information that can be used to support arguments for maintaining the status quo—for example, the cost of pensions administration. In 1991–92, that cost was £25 million compared with the then gross cost of civil service pension payments of nearly £2 billion—that is found in paragraph 7. I take Paymaster as an example. It represents the largest share—36 per cent.—of the cost of civil service pensions administration and pays pensions to 1.5 million public servants, including teachers and NHS staff.
Paragraph 23 of the efficiency unit report says:
it thereby achieves great economies of scale"—
a point hinted at by my hon. Friend the Member for Norwich, South (Mr. Garrett). Paragraph 24 goes on:
the PGO's unit costs … are currently around £16, which is broadly in line with what the private sector would charge for a large scale pension paying service.
Other than market testing, almost all the recommendations of that efficiency scrutiny have been or are being implemented. Already considerable benefits are accruing. Even greater efficiencies will be possible when the new information technology software, produced by the

civil service pensions division, is introduced shortly. If outside organisations are allowed to take over the administration of the pension scheme, the software will be made available to them free of charge. In other words, private contractors will be subsidised by the taxpayer to take over the jobs of civil servants.
One of the recommendations of the efficiency scrutiny which has already been implemented is the delegation of responsibility for administration from central Departments to Departments and agencies. There are already a number of very satisfactory pension administration providers within the civil service. In addition to Paymaster, they include the Inland Revenue, the Department of Social Security, the Department for Education and Employment, the Ministry of Defence and the Home Office. Consequently, an internal market already exists. Departments have a choice of providers, all of whom have very considerable expertise in administering large-scale public sector pensions.
The efficiency scrutiny recognises that
most large employers with above say 1,000 staff run their own employers scheme and administer it in-house. The pension consulting and insurance firms manage many schemes for employers, but most of these are schemes with less than 1,000 members. A few are between 1,000 and 2,000 members, and a very small number are larger than that. Where larger schemes are contracted out—and there are a handful of examples—it tends to be for particular reasons reflecting a strategic decision on the part of management".
It goes on, in paragraph 52, to produce a draft which
suggests that above about 20.000 staff-in-house operations are actually cheaper than contracting out".

Mr. Willetts: I invite the right hon. Gentleman to complete the sentence, which goes on to say:
this is not, of course, a reason for not testing the market".

Mr. Foster: The Minister anticipates me; I was going to quote those very words, which I shall not now do.
Paragraph 56 of the efficiency scrutiny claims:
it is thought that the efficiency of contracted out pensions administration is likely to improve significantly over the next few years as new technology is introduced"—
that is under the present arrangements, of course. Civil servants and civil service pensioners object most strongly to their pensions and their pension scheme being used to allow the private sector to experiment to improve its own efficiency. The pensions of civil servants—indeed, any pensions—are far too important to be used as training aids for inexperienced contractors.
A detailed study of paragraphs 49 to 60 of the efficiency unit scrutiny develops no convincing arguments for market testing, other than that it is a central policy of the Government. The case is not made that the private sector is more efficient or more effective in administering pensions on the scale of those in the civil service. Civil servants and civil service pensioners are not dogmatically opposed to the private sector or to the proper use of outside expertise in relation to their pension scheme.
A private sector organisation, Triskels, has worked closely with civil service pensions to improve communications and to produce a new series of explanatory booklets on the scheme. This work has been of the highest quality and has much to recommend it.


Again, the case is not made for there being greater expertise in the private sector in administering the schemes.
In the Government's consultations of regulations arising from the Pension Act 1995 and the Occupational Pension Scheme (Transfer Values) Regulations 1996 responses have demonstrated concerns about the efficiency of out-sourced pension administrations. I shall quote the third paragraph of a letter from the Department of Social Security dated 15 March:
During the consultation process which has been ongoing since last summer, some commentators have suggested that the period proposed for providing a guaranteed statement to the member (effectively 7 working days excluding weekends) was too short. Schemes which had "outsourced" their pension administration would face real difficulties in complying with the deadline.
Civil servants and civil service pensioners are content with the service that they get from the present in-house scheme administrators. They would certainly object to the administration being transferred to private sector organisations that cannot respond quickly to the demands of members.

Mr. Andrew Rowe (Mid-Kent): I am listening to the hon. Gentleman very carefully. Is he referring to organisations that have assets to manage or to the notional schemes with which the public sector is concerned? It seems to me that providing information rapidly on the basis of an entirely notional scheme is much less problematic than providing information rapidly on a scheme in which there are real assets and real investments to measure up.

Mr. Foster: I was making the point that problems have already been discovered in those companies that have out-sourced their pension schemes. This is recognised by Government Departments, such as the Department of Social Security. Clearly, existing pensioners and members of the scheme are more than satisfied with the service that they currently receive. They do not want to risk that standard of service by being contracted out to organisations that do not have the expertise or the experience of large schemes.
In preparing the efficiency unit scrutiny, the Treasury commissioned two independent surveys by the Wyatt company to ascertain the views of recent leavers from the civil service and current members of staff about the pension scheme. Of the leavers, more than 60 per cent. responded positively. They thought that the service was efficient and sensitive. I contend that the figure would be much higher now given the in-house improvements in efficiency that have been made.
None of the surveys showed any support for market testing or contracting out. However, if Ministers are so convinced that their current proposals are in the best interests of civil servants and of civil service pensioners, they should have the courage of their convictions. They should commission yet another survey, perhaps again from the Wyatt company, to test support among civil servants and civil service pensioners.

Dr. John Marek: My right hon. Friend is making a most telling case. He must know that the Minister is a civil service leaver, and I wonder whether he has a preserved pension. Perhaps the Minister is not concerned about the proposal and has given precedence to dogma over common sense. I should have thought that

if he were concerned, as a civil servant, about his colleagues in the civil service, he would weigh my right hon. Friend's words carefully. I should have thought that he would want to propose at the Dispatch Box those policies that have the support of his one-time colleagues instead of proposing, as appears to me from listening to his speech, a bit of dogma that has no backbone of support from his former colleagues.

Mr. Foster: I am grateful to my hon. Friend for that intervention and I am sure that his remarks have been well noted by the Minister, who may have the opportunity to reply to them when he responds to the debate.
I am inviting the Minister to conduct another survey to test the opinion of civil servants and civil service pensioners. After all, the Government readily concede that members of pension schemes have rights. That principle should apply as much to civil servants as to former employees of Robert Maxwell.
On behalf of the Opposition, I join the civil service unions and the Civil Service Pensioners Alliance in challenging the Government to let civil servants and civil service pensioners decide the future administration of their scheme. Perhaps the Minister will respond to that challenge when he replies to the debate.
I must ask what the order is for. Why are the Government so determined to make themselves so unpopular with so many people, for so little return? The current scheme is efficiently administered, as admitted in the scrutiny report. The members of the scheme are perfectly content with the current arrangements. If the Government's intention was to squeeze further efficiency from the administration of the scheme, they could do that within the internal market now operating. So why is the Minister bothering to create all that hassle for his Government? Is not the real reason the Government's wish to privatise Paymaster? Without the order, a privatised Paymaster could not tender for the contract. Without that substantial contract, Paymaster would be a far less attractive proposition for privatisation.
So here we go again. I think that Ministers have become privatisation junkies. As they stumble from crisis to crisis, beating the retreat towards the general election, they scorch the earth as they go. They are completely in the hands of the ideologues who are now running the show. They are appeasing the right; they are ignoring the view of 1 million floating voters, who perhaps more than any other group represent middle England.
The Conservative party, that once formidable vote-gathering machine, is now incapable of addressing the concerns of the British people. Its unpopularity is richly deserved. For those who have created so much job insecurity for others, there is some justice in the fact that perhaps the most insecure jobs of all are those of the Prime Minister and those on the Government Benches. I therefore urge my right hon. and hon. Friends to oppose the order in the Lobby.

Sir Edward Heath: The debate gives me the opportunity to say a few words that I have long wanted to say about the position of the civil service.
I must immediately declare an interest that I had long before Nolan decided to treat us all as criminals. When I left the Army, in 1946, I decided to enter the civil service


if possible. I therefore sat the administrative examination, and I have always been rather proud of the fact that I came top of the whole administrative service. [HON. MEMBERS: "Hear, hear."] I am glad to know that my party appreciates it—it has taken 50 years, but it is nevertheless very gratifying.
I entered the civil service, and I was there for a year. I found that I could not get anything done, so I left and entered politics. I will not make a comparison between the two—that might be invidious—but, at that time, those of us who had been at university before the war regarded it as one of our main objectives to get into the administrative civil service because it was so highly respected, in this country and elsewhere. The civil service was certainly the envy of the whole of the English-speaking world, and of what were then the colonies.
What is the position today? The morale of the civil service has never been lower—never. One knows that full well from all one's contacts with the civil service. Is that healthy? Of course not. Therefore, one should pay attention to every possible factor that affects the civil service.
The right hon. Member for Bishop Auckland (Mr. Foster) rightly mentioned the political impact in our country at the moment. I am not putting it in the forefront of the argument, but it is a very important political factor for my constituency and others like it on the outer ring of London. It certainly will not help the Government to recover from the position in which they found themselves last Thursday.
In the past 15 years, too many people have tried to gain credit by discrediting the civil service; the only thing they have done is to decry the number of people in the civil service and claim great victories when the number went down. That was mostly bogus, because people were moved out of the civil service into other organisations that do the same job. The number was not greatly diminished, but great uncertainty in the civil service was produced. The exercise has therefore achieved nothing.
The hard facts of the case are that, if one wants to reduce numbers in the civil service, one must provide not some outside organisation, but an alternative means of tackling the problems that the service must handle every day. That means that one must have some mechanisation—newer developments in equipment and so on—to enable fewer people to do the job. At the moment, jobs are simply not being done.
I do not know the experience of other right hon. and hon. Members, but I have done an analysis of the first three months of this year, and time and again I have waited two months before receiving a letter from a Minister in response to a constituent's problem. I have now received such a letter after a wait of three months. If I may say so very humbly, if it takes two or three months to answer my letters, I do not know how long it is taking to answer those of other hon. Members. That is the situation the Government have to deal with, and it is another reason why our voters are entirely disillusioned with the service that Government and Ministers give them regarding their day-to-day problems.
The issue of pensions is crucial for civil servants. Again we are told, "Privatise it!" Of course there has been a major field for privatisation, but we must acknowledge

that the position regarding the services is quite different, and dogma to the effect that they should be privatised is causing much trouble.
The job—the intention—of privatisation is not to provide a service but to make profit. In the process, privatisation may provide a service for some, but not all. That is the automatic result of any economic analysis. When it comes to pensions, private providers are not interested in providing a service: like any insurance company, they are interested in how they will make money for their shareholders. That condemnation may be levelled at all moves by my hon. Friend and by the Government to allow services to be provided by those who are not service providers. Such people simply seek to make money for their shareholders.

Mr. Alan Duncan: You must be joking—weren't you a Conservative?

Sir Edward Heath: If my hon. Friend denies that fact, he is not a sound Conservative economist. I am prepared to argue that point. In pursuing the privatisation path, particularly regarding civil service arrangements, my hon. Friend the Minister is making a grave mistake.
I hope that the Government will reconsider their attitude and distinguish between the privatisation sphere and the sphere of services that can be provided only by organisations such as the present civil service. I know that my hon. Friend will not take any notice of my suggestion, and I am sorry that I cannot stay to listen to his refusal to do so, but I am quite prepared to read his comments in Hansard tomorrow and see on what grounds he repudiates my request.
I believe that it is a basic consideration. The Government must decide to draw the line and stop carrying on in a dogmatic manner, believing that whatever they do in that sphere is correct. The public have come soundly to the conclusion that it is not correct, which is why the Government are suffering in many ways—including this way.

Mr. David Rendel: It is a great pleasure to follow the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), not least because he echoes the comments that we on these Benches have made for much of the Government's tenure of office. I am delighted to welcome him to our point of view. Given that the Government's majority has been reduced to one, I hope that the right hon. Gentleman will take the opportunity—which he obviously did not have in the civil service—to do something really dramatic and join us in the Lobby to defeat the Government tonight. I look forward to that moment with considerable pleasure.
The Liberal Democrats are not dogmatically opposed to market testing or to contracting out—we have never said that and we never shall. On the contrary, we believe that such matters should be considered individually on their merits. Benefits may be derived from market testing or from contracting out. We may benefit from outside expertise, knowledge and new ideas or opportunities. The competitive process may lead to an increase in the number of new choices which may lead, in turn, to a better solution, but that is not an inevitable consequence and


there are points to be made on the other side of the argument. I believe that, in this case, the points against outweigh any advantages that may be gained.
The first point that we must make is that administration of a pension fund is not a negligible matter, as the Minister seemed to imply in at least part of his speech. We are talking about those who will not be the investors in pension funds, but that does not diminish the importance of their work—particularly for the pensioners concerned. The fact that a pensioner may be paid the right sum, but paid it three months late due to an administrative error, is crucial for that pensioner. For example, a pension might be paid into the wrong bank account and the money might not reach its rightful recipient for some time. Good administration of a pension fund is just as important as good investment or getting the sums right.
The Minister skated lightly over the problem of confidentiality which is immensely important to some civil servants. Those who work in the Ministry of Defence or the Foreign and Commonwealth Office are obvious examples of civil servants who may not wish their private affairs, their addresses and their financial details to become public knowledge. Of course there is some risk of that, and those people fear that there will be a greater likelihood that their affairs will be more widely known, if their pension fund is administered by a private contractor instead of a civil service organisation.

Mr. Nigel Jones: Can my hon. Friend think of any way in which my constituents who work at GCHQ could benefit from the order and protect the confidentiality of their pension arrangements?

Mr. Rendel: No, indeed. My hon. Friend has raised an important point. His constituents are at the heart of the problem of confidentiality because of the work in which they are involved and the risks that they will take if their whereabouts or personal details become known in the private sector.
Moreover, the Government have failed to dispel the suspicion that the process has been driven by a dogmatic desire to extend the amount of private involvement in the public sector. In his opening remarks, the Minister said that steps would be taken to maintain confidentiality, but that was all he said about it. I do not consider that a sufficient guarantee that confidentiality will be properly maintained.
There is a further concern that the Government seem to be driven by dogma rather than by a rational consideration of what is needed. The Government may be moving towards a greater break-up of public service pension funds than they have so far admitted.
The current service is well received by civil servants and those who have recently retired. Recent enhancements, some of which have been described, have been made to the current service. The efficiency scrutiny that has been mentioned accepts that, for a very large number of employees and pensioners, in-house administration is almost always more efficient and cost-effective than going to an outside contractor. That is almost common sense, so it is difficult to see why the Government do not accept it.
The most important objection to what the Government are doing brings me back to the point made by the right hon. Member for Old Bexley and Sidcup. Civil service morale is so low that to give it a further blow, as the Government are doing tonight, is no way to proceed.
The main reason why the measure will be a further blow to civil service morale is the lack of consultation with those covered by the scheme. Although those involved may have been formally consulted, their views were not taken into account and that makes the consultation rather superficial. The Government have talked about the need for private sector businesses to improve communication with their employees. That is an important consideration for all businesses, following numerous examples of bad practice, yet the Government are ignoring their own advice and the right of current and former civil servants to have a real say in the administration of their pension scheme. If it is right that that should happen in the private sector, it must be even more right that it should happen in the public sector.
Because the Government are not governed by company law, they are better able to take into account the real needs and desires of former and current employees rather than simply to take into account the bottom line. What they are doing tonight is an example of bad government. Civil servants have had to put up with enough in recent years, working in an increasingly tense public sector with falling morale. To ignore further their views, as the Government threaten to do tonight, will make it likely that their morale will fall still further. That will have a damaging impact on the conduct of government. The Government should not get the order through the House tonight.

Mr. Willetts: The right hon. Member for Bishop Auckland (Mr. Foster) complained about insecurity in the civil service, then went about stirring up insecurity with a series of lurid claims about the future of the civil service pension scheme that bear no relationship to reality. The right hon. Gentleman accused us of having a plan to break up and destroy the principal scheme, but that is simply not the case. We are talking simply about creating the opportunity for competitive tendering for the administration of the scheme, which will have no effect on benefits.
The proposal is, in the best sense of the word, permissive. It simply creates a new opportunity for Departments to invite the private sector to tender for the business of administering civil service schemes—something from which they are stopped by law from doing. We are removing that obstacle.
The right hon. Member for Bishop Auckland made great play of the efficiency scrutiny. I am perfectly willing to accept all the quotes that the right hon. Gentleman gave, provided that he will accept the point made at the beginning of the report:
The scrutiny has established that there is a range of services which the private sector could offer with advantage, including pensions administration. It recommends that market testing should proceed as soon as the legal position has been resolved.
We are now implementing that proposal.
The right hon. Member for Bishop Auckland asked why we are not balloting members. I am not aware of any precedent for balloting members of any pension scheme, public or private, on its administrative arrangements—that would be an extraordinary and unprecedented step.
I am grateful to my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) for remaining in his place for the remainder of the debate. He raised important questions about the civil service as a whole. My right hon. Friend spoke as a former civil servant; I shall reply to him as a former civil servant myself.
I was in Oxford last Friday, and I asked the dons whether they remembered the days—which I am sure my right hon. Friend remembers—when undergraduates used to sit in serried ranks to take the civil service entrance examination. I asked whether undergraduates still did so, and the answer was an unambiguous yes. Undergraduates are still trying to enter a career in the civil service because of the job satisfaction that the service offers, enhanced by our reforms which aim to give more managerial responsibility and discretion to civil servants, who should not suffer under the elaborate hierarchies under which the service operated in the past.
My right hon. Friend the Member for Old Bexley and Sidcup feared bogus reductions in civil service staff numbers. Of course we must be wary of bogus reductions, but I assure my right hon. Friend that the reduction from 732,000 staff in 1979 to fewer than 500,000 today has been achieved not by statistical manipulation but by precisely the sort of changes that my right hon. Friend recommended. One example is the use of automation in fundamentally improving the way in which services are delivered.

Mr. Derek Foster: If the situation is as the Minister says, why did the ombudsman draw particular attention in his latest report to the deterioration in the quality of service given and make the point that it was due to staff reductions? The ombudsman stated that staff numbers have so reduced that the service is not able to give the same quality of service, and he is receiving far more complaints.

Mr. Willetts: I have studied the ombudsman's latest report carefully and I cannot find in it evidence to sustain the assertion that appeared in the press notice. We take careful notice of anything that the ombudsman says, as he is an officer serving the House, but I do not accept the assumption that the way to measure the quality of output is by measuring the input. The challenge for the private sector is to improve the quality of service that it offers customers while not spending more on overheads and running costs. We should expect the same of the public service.

Mr. Rowe: I am sure that my hon. Friend would remove a miasma of anxiety if he were able to confirm that, if a private sector provider won the contract and made a horlicks of it in some way, the cost of making that mistake would not fall on the scheme but on the company providing the administration.

Mr. Willetts: I can give my hon. Friend the assurance that he seeks. Nothing in the proposals will in any way affect the benefits payable to civil servants. That leads me to the short speech from the hon. Member for Newbury (Mr. Rendel).

Mr. Rendel: If what I gather is nowadays described as a horlicks were made by the company concerned, that might include problems such as I mentioned in which somebody was paid very late. Does the Minister agree that late payment would affect the pensioner concerned?

Mr. Willetts: The hon. Gentleman, while he has protested great concern about this subject, does not seem

to understand the basic elementary points of what we propose. The proposals cover the administration of the scheme for current civil servants. That has nothing to do with the payment of pensions to former civil servants. The proposals in the order concern entirely the administration of the scheme for current civil servants and are nothing to do with Paymaster's function of paying out benefits and pensions to retired civil servants.
On the basis of the clarification that I have been able to offer tonight—in particular, the fundamental assurance that the order contains no change to civil servants' pension rights—I invite the House to approve the order.

Dr. John Marek: I am sorry to speak now, but I honestly thought that one or two Conservative Members would rise to support the Minister. Alas, I fear that that is not the case. The right hon. Member for Old Bexley and Sidcup (Sir E. Heath), in a well-meaning way, tried to put the Government back on the rails. I agreed completely with the right hon. Gentleman because he got to the nub of the problem. I dissent from the conclusion that he drew, because he was trying to guide the Conservative party to a line that would enable it to remain in office. As an Opposition Member, I cannot agree with that, but if the Government insist on continuing with their dogma—the word has been used on several occasions by different right hon. and hon. Members—it is likely that they will be turfed out at the next general election, whenever they have enough courage to call one.
The issue centres on providing service rather than profits. I concur with the right hon. Member for Old Bexley and Sidcup because, for a substantive reply from some Government Departments—not all—I now have to wait not two or three months, except on rare occasions, but two, three or four weeks. In the Department of Social Security, for example, the time that civil servants have to give care to their answers and to work out the arithmetic about individual claimants is minimal, the result of which is that the number of mistakes made in that Department multiplies from day to day. That is a sorry state of affairs. The country should expect accuracy and efficiency from civil servants, and they should reply to letters in a reasonable time.
It is all very well having charters for this and charters for that, but if replies are not accurate, if the figures are wrong, and constituents have to go to their Members of Parliament, who then have to write again to the social security department or to the Secretary of State for Social Security, that is not good for the country or for my constituents, because of the extra work and administration.
That is the nub of the problem. I expect the civil service to be staffed sufficiently to be able to produce accurate, proper and quick answers to my constituents' questions. I fear that, during the past six or seven years, with cuts—another per cent. here, or another per cent. there—they have not been receiving that service.
The Minister made a glib speech. I hope that he will not mind my saying so—I do not mean this in any rude way—but he did not address the questions that the proposal raises. He talked about the civil service scheme and the fact that the benefits that civil servants receive would not be affected, regardless of whether the scheme was hived off to the private sector for administration


purposes. What he did not talk about—not once—was the effect that it would have on the taxpayer, the ordinary member who pays taxes in the United Kingdom.
If the scheme was hived off to the private sector and a mess—I do not want to use the word horlicks—of the scheme was made, and if the civil servants did not lose any of the pension entitlements as, rightly, they should not, the country would have to foot the bill. I am not sure that the computing system for the scheme is ready yet—there are questions about whether it is in place.
If the scheme were to be hived off, is the advantage anything other than saving money? If it is, when the market testing goes ahead, will the Minister set parameters that at least assure some hon. Members that standards of service will be met? The Minister did not mention that. He may not have wanted to. Some standards of service could be identified to ensure that the civil service pensioner will receive the same service as now, when the scheme is being administered by the civil service. I am talking, for example, about acknowledgements of a pensioner's letter by return of post, about substantive replies being given within two or three weeks and, more important, some statistics about the accuracy and helpfulness of those replies.
The simple straightforward question, which addresses directly the problem raised by the right hon. Member for Old Bexley and Sidcup, is whether there is a possibility of marrying the desire of a private company to make profits for its shareholders with the ability to provide standards of service that can be guaranteed and in which civil service pensioners can have confidence when the specifications for the market testing are produced. I do not know. I rather doubt it. This is a matter of service as opposed to profit. Administration of the scheme should be left in the hands of those who have administered it extremely well over the past decades. That is an important question and I am sorry that the Minister has not answered it.
I come now to the second point—[Interruption.] Conservative Members are fed up with me. [Interruption.] Some hon. Members are not even in the Chamber. They should keep quiet or move into the Chamber, because that is the way in which we do things in the House of Commons. Half a million civil servants are interested in who will administer their pension scheme. It is a great pity—I see that my own Whip is now telling me to wind up my speech, but I shall make an important point before I do. It will not take long. If hon. Members pay attention, I hope that they will learn something, or at least have something to think about.
My second point is straightforward but important. In the private sector, there has recently been a spate of conversions of mutual societies to banks and so forth. People are balloted before any change is made in their mortgage arrangements and, following Maxwell, before any change has been made in the administration of private sector pensions, all pensioners have been balloted on whether they agree with the change.
My challenge to the Minister is very simple: is he prepared to ballot civil servants after the changes have been agreed, or recommended, to find out whether those who will be affected accept the changes? That is a straightforward, simple question. Unfortunately, the Minister has not answered it. There are two points there—[Interruption.] I am asked what the third point is, but there is no third point. We must get on.
First, there is the question of service. Can the Minister assure the House that standards of service will be set if the administration passes to the private sector? Secondly, will he have the guts, the decency and the respect for civil servants to ballot them before the provisions are enacted?

Question put:—

The House divided: Ayes 261, Noes 240.

Division No. 121]
[11.21 pm


AYES


Ainsworth, Peter (East Surrey)
Duncan, Alan


Aitken, Rt Hon Jonathan
Duncan Smith, Iain


Alexander, Richard
Dunn, Bob


Alison, Rt Hon Michael (Selby)
Durant, Sir Anthony


Allason, Rupert (Torbay)
Elletson, Harold


Amess, David
Emery, Rt Hon Sir Peter


Arbuthnot, James
Evans, David (Welwyn Hatfield)


Arnold, Jacques (Gravesham)
Evans, Jonathan (Brecon)


Atkins, Rt Hon Robert
Evans, Nigel (Ribble Valley)


Atkinson, Peter (Hexham)
Evans, Roger (Monmouth)


Baker, Nicholas (North Dorset)
Evennett, David


Baldry, Tony
Faber, David


Banks, Matthew (Southport)
Fabricant, Michael


Banks, Robert (Harrogate)
Fenner, Dame Peggy


Batiste, Spencer
Field, Barry (Isle of Wight)


Bendall, Vivian
Forman, Nigel


Beresford, Sir Paul
Forth, Eric


Booth, Hartley
Fowler, Rt Hon Sir Norman


Boswell, Tim
Fox, Rt Hon Sir Marcus (Shipley)


Bowis, John
Freeman, Rt Hon Roger


Boyson, Rt Hon Sir Rhodes
French, Douglas


Brandreth, Gyles
Fry, Sir Peter


Brazier, Julian
Gale, Roger


Bright, Sir Graham
Gallie, Phil


Brooke, Rt Hon Peter
Gardiner, Sir George


Brown, M (Brigg & Cl'thorpes)
Garnier, Edward


Browning, Mrs Angela
Gill, Christopher


Bruce, Ian (South Dorset)
Gillan, Cheryl


Budgen, Nicholas
Goodlad, Rt Hon Alastair


Burns, Simon
Goodson-Wickes, Dr Charles


Burt, Alistair
Gorman, Mrs Teresa


Butcher, John
Grant, Sir A (SW Cambs)


Butler, Peter
Greenway, Harry (Ealing N)


Butterfill, John
Greenway, John (Ryedale)


Carlisle, John (Luton North)
Griffiths, Peter (Portsmouth, N)


Carlisle, Sir Kenneth (Lincoln)
Grylls, Sir Michael


Carrington, Matthew
Gummer, Rt Hon John Selwyn


Carttiss, Michael
Hamilton, Rt Hon Sir Archibald


Cash, William
Hamilton, Neil (Tatton)


Channon, Rt Hon Paul
Hampson, Dr Keith


Chapman, Sir Sydney
Hanley, Rt Hon Jeremy


Churchill, Mr
Hannam, Sir John


Clappison, James
Hargreaves, Andrew


Clark, Dr Michael (Rochford)
Haselhurst, Sir Alan


Clarke, Rt Hon Kenneth (Ru'clif)
Hawkins, Nick


Clifton-Brown, Geoffrey
Hawksley, Warren


Coe, Sebastian
Hayes, Jerry


Colvin, Michael
Heald, Oliver


Congdon, David
Heathcoat-Amory, Rt Hon David


Conway, Derek
Hendry, Charles


Coombs, Anthony (Wyre For'st)
Higgins, Rt Hon Sir Terence


Coombs, Simon (Swindon)
Hill, James (Southampton Test)


Couchman, James
Horam, John


Cran, James
Hordern, Rt Hon Sir Peter


Currie, Mrs Edwina (S D'by'ire)
Howard, Rt Hon Michael


Curry, David (Skipton & Ripon)
Howell, Rt Hon David (G'dford)


Davies, Quentin (Stamford)
Howell, Sir Ralph (N Norfolk)


Day, Stephen
Hughes, Robert G (Harrow W)


Deva, Nirj Joseph
Hunt, Rt Hon David (Wirral W)


Dicks, Terry
Hunt, Sir John (Ravensbourne)


Dorrell, Rt Hon Stephen
Hunter, Andrew


Douglas-Hamilton, Lord James
Hurd, Rt Hon Douglas


Dover, Den
Jack, Michael






Jackson, Robert (Wantage)
Rifkind, Rt Hon Malcolm


Jenkin, Bernard
Robathan, Andrew


Jessel, Toby
Roberts, Rt Hon Sir Wyn


Johnson Smith, Sir Geoffrey
Robertson, Raymond (Ab'd'n S)


Jones, Gwilym (Cardiff N)
Robinson, Mark (Somerton)


Jones, Robert B (W Hertfdshr)
Rowe, Andrew (Mid Kent)


Kellett-Bowman, Dame Elaine
Sainsbury, Rt Hon Sir Timothy


Key, Robert
Scott, Rt Hon Sir Nicholas


King, Rt Hon Tom
Shaw, David (Dover)


Kirkhope, Timothy
Shaw, Sir Giles (Pudsey)


Knapman, Roger
Shephard, Rt Hon Gillian


Knight, Mrs Angela (Erewash)
Shepherd, Sir Colin (Hereford)


Knight, Rt Hon Greg (Derby N)
Shepherd, Richard (Aldridge)


Knight, Dame Jill (Bir'm E'st'n)
Shersby, Sir Michael


Knox, Sir David
Skeet, Sir Trevor


Kynoch, George (Kincardine)
Smith, Tim (Beaconsfield)


Lait, Mrs Jacqui
Soames, Nicholas


Lamont, Rt Hon Norman
Spencer, Sir Derek


Lang, Rt Hon Ian
Spicer, Sir James (W Dorset)


Lawrence, Sir Ivan
Spicer, Sir Michael (S Worcs)


Legg, Barry
Spink, Dr Robert


Leigh, Edward
Sproat, Iain


Lennox-Boyd, Sir Mark
Squire, Robin (Hornchurch)


Lester, Sir James (Broxtowe)
Stanley, Rt Hon Sir John


Lidington, David
Stephen, Michael


Lilley, Rt Hon Peter
Stern, Michael


Lloyd, Rt Hon Sir Peter (Fareham)
Stewart, Allan


Lord, Michael
Streeter, Gary


Luff, Peter
Sumberg, David


Lyell, Rt Hon Sir Nicholas
Sweeney, Walter


MacKay, Andrew
Tapsell, Sir Peter


Maclean, Rt Hon David
Taylor, Ian (Esher)


McLoughlin, Patrick
Taylor, Rt Hon John D (Strgfd)


Madel, Sir David
Taylor, John M (Solihull)


Maitland, Lady Olga
Taylor, Sir Teddy (Southend, E)


Malone, Gerald
Thomason, Roy


Mans, Keith
Thompson, Sir Donald (C'er V)


Marland, Paul
Thompson, Patrick (Norwich N)


Marshall, Sir Michael (Arundel)
Townend, John (Bridlington)


Martin, David (Portsmouth S)
Townsend, Cyril D (Bexl'yh'th)


Mates, Michael
Tredinnick, David


Mawhinney, Rt Hon Dr Brian
Trend, Michael



Trotter, Neville


Mayhew, Rt Hon Sir Patrick
Vaughan, Sir Gerard


Merchant, Piers
Viggers, Peter


Mills, Iain
Waldegrave, Rt Hon William


Mitchell, Andrew (Gedling)
Walden, George



Waller, Gary


Mitchell, Sir David (NW Hants)
Ward, John


Monro, Rt Hon Sir Hector
Wardle, Charles (Bexhill)


Montgomery, Sir Fergus



Neubert, Sir Michael
Waterson, Nigel


Newton, Rt Hon Tony
Watts, John


Nicholls, Patrick
Wells, Bowen


Nicholson, David (Taunton)
Whitney, Ray


Norris, Steve
Whittingdale, John


Oppenheim, Phillip
Widdecombe, Ann


Ottaway, Richard
Wiggin, Sir Jerry


Page, Richard
Wilkinson, John


Paice, James
Willetts, David


Patnick, Sir Irvine
Wilshire, David


Patten, Rt Hon John
Winterton, Mrs Ann (Congleton)


Pattie, Rt Hon Sir Geoffrey
Winterton, Nicholas (Macc'f'ld)


Pawsey, James
Wolfson, Mark


Porter, David (Waveney)
Wood, Timothy


Portillo, Rt Hon Michael
Yeo, Tim


Rathbone, Tim
Young, Rt Hon Sir George


Redwood, Rt Hon John



Renton, Rt Hon Tim
Tellers for the Ayes:


Richards, Rod
Dr. Liam Fox and Mr. Michael Bates.


Riddick, Graham





NOES


Abbott, Ms Diane
Alton, David


Adams, Mrs Irene
Anderson, Donald (Swansea E)


Anger, Nick
Anderson, Ms Janet (Ros'dale)


Ainsworth, Robert (Cov'try NE)
Armstrong, Hilary


Allen, Graham
Ashton, Joe





Banks, Tony (Newham NW)
Godman, Dr Norman A


Barnes, Harry
Godsiff, Roger


Barron, Kevin
Golding, Mrs Llin


Battle, John
Graham, Thomas


Beckett, Rt Hon Margaret
Griffiths, Nigel (Edinburgh S)


Bennett, Andrew F
Griffiths, Win (Bridgend)


Bermingham, Gerald
Grocott, Bruce


Betts, Clive
Gunnell, John


Blunkett, David
Hain, Peter


Boateng, Paul
Hall, Mike


Bradley, Keith
Hanson, David


Brown, N (N'c'tle upon Tyne E)
Harman, Ms Harriet


Bruce, Malcolm (Gordon)
Harvey, Nick


Burden, Richard
Hattersley, Rt Hon Roy


Byers, Stephen
Henderson, Doug


Caborn, Richard
Heppell, John


Callaghan, Jim
Hill, Keith (Streatham)


Campbell, Mrs Anne (C'bridge)
Hoey, Kate


Campbell, Menzies (Fife NE)
Hogg, Norman (Cumbernauld)


Campbell, Ronnie (Blyth V)
Home Robertson, John


Canavan, Dennis
Hood, Jimmy


Cann, Jamie
Hoon, Geoffrey


Carlile, Alexander (Montgomery)
Howarth, Alan (Strat'rd-on-A)


Chisholm, Malcolm
Howarth, George (Knowsley North)


Church, Judith
Howells, Dr Kim (Pontypridd)


Clapham, Michael
Hoyle, Doug


Clark, Dr David (South Shields)
Hughes, Kevin (Doncaster N)


Clarke, Eric (Midlothian)
Hughes, Robert (Aberdeen N)


Clarke, Tom (Monklands W)
Hughes, Roy (Newport E)


Clelland, David
Hughes, Simon (Southwark)


Coffey, Ann
Hutton, John


Cohen, Harry
Illsley, Eric


Connarty, Michael
Ingram, Adam


Corbett, Robin
Jackson, Glenda (H'stead)


Corbyn, Jeremy
Jackson, Helen (Shef'ld, H)


Corston, Jean
Jamieson, David


Cousins, Jim
Jenkins, Brian (SE Staff)


Cox, Tom
Johnston, Sir Russell


Cunliffe, Lawrence
Jones, Barry (Alyn and D'side)


Cunningham, Jim (Covy SE)
Jones, Jon Owen (Cardiff C)


Cunningham, Rt Hon Dr John
Jones, Lynne (B'ham S O)


Dalyell, Tam
Jones, Martyn (Clwyd, SW)


Darling, Alistair
Jones, Nigel (Cheltenham)


Davidson, Ian
Jowell, Tessa


Davies, Bryan (Oldham C'tral)
Keen, Alan


Davies, Chris (L'Boro & S'worth)
Kennedy, Charles (Ross, C&S)


Davies, Rt Hon Denzil (Llanelli)
Khabra, Piara S


Davies, Ron (Caerphilly)
Kilfoyle, Peter


Denham, John
Kirkwood, Archy


Dewar, Donald
Litherland, Robert


Dixon, Don
Livingstone, Ken


Dobson, Frank
Lloyd, Tony (Stretford)


Donohoe, Brian H
Llwyd, Elfyn


Dowd, Jim
Lynne, Ms Liz


Dunwoody, Mrs Gwyneth
McAllion, John


Eagle, Ms Angela
McAvoy, Thomas


Eastham, Ken
McCartney, Ian


Etherington, Bill
McFall, John


Evans, John (St Helens N)
McKelvey, William


Fatchett, Derek
Mackinlay, Andrew


Faulds, Andrew
McLeish, Henry


Field, Frank (Birkenhead)
McMaster, Gordon


Fisher, Mark
McNamara, Kevin


Flynn, Paul
MacShane, Denis


Foster, Rt Hon Derek
Madden, Max


Foster, Don (Bath)
Maddock, Diana


Foulkes, George
Mandelson, Peter


Fraser, John
Marek, Dr John


Fyfe, Maria
Marshall, David (Shettleston)


Galbraith, Sam
Marshall, Jim (Leicester, S)


Galloway, George
Martlew, Eric


Gapes, Mike
Maxton, John


Garrett, John
Meacher, Michael


George, Bruce
Michael, Alun


Gerrard, Neil
Michie, Bill (Sheffield Heeley)


Gilbert, Rt Hon Dr John
Michie, Mrs Ray (Argyll & Bute)






Milburn, Alan
Sheldon, Rt Hon Robert


Miller, Andrew
Shore, Rt Hon Peter


Moonie, Dr Lewis
Short, Clare


Morgan, Rhodri
Simpson, Alan


Morley, Elliot
Skinner, Dennis


Morris, Estelle (B'ham Yardley)
Smith, Andrew (Oxford E)


Morris, Rt Hon John (Aberavon)
Smith, Chris (Isl'ton S & F'sbury)


Mudie, George
Smith, Llew (Blaenau Gwent)


Mullin, Chris
Snape, Peter


Murphy, Paul
Soley, Clive


O'Brien, Mike (N W'kshire)
Spearing, Nigel


O'Brien, William (Normanton)
Spellar, John


O'Hara, Edward
Steinberg, Gerry


Olner, Bill
Stevenson, George


O'Neill, Martin
Stott, Roger


Orme, Rt Hon Stanley
Strang, Dr. Gavin


Parry, Robert
Straw, Jack


Pearson, Ian
Sutcliffe, Gerry


Pendry, Tom
Taylor, Mrs Ann (Dewsbury)


Pickthall, Colin
Timms, Stephen


Pike, Peter L
Tipping, Paddy


Pope, Greg
Touhig, Don


Prentice, Bridget (Lew'm E)
Trickett, Jon


Prentice, Gordon (Pendle)
Turner, Dennis


Prescott, Rt Hon John
Tyler, Paul


Quin, Ms Joyce
Walley, Joan


Radice, Giles
Wardell, Gareth (Gower)


Randall, Stuart
Wareing, Robert N


Raynsford, Nick
Watson, Mike


Reid, Dr John
Wicks, Malcolm


Rendel, David
Wigley, Dafydd


Robinson, Geoffrey (Co'try NW)
Williams, Rt Hon Alan (Sw'n W)


Roche, Mrs Barbara
Williams, Alan W (Carmarthen)


Rogers, Allan
Worthington, Tony


Rooker, Jeff
Wray, Jimmy


Rooney, Terry
Wright, Dr Tony


Ross, Ernie (Dundee W)
Young, David (Bolton South East)


Rowlands, Ted



Ruddock, Joan
Tellers for the Noes:


Salmond, Alex
Mr. Joe Benton and Mrs. Jane Kennedy.


Sedgemore, Brian

Question accordingly agreed to.

Resolved,

That the draft Contracting Out (Administration of Civil Service Pension Schemes) Order 1996, which was laid before this House on 25th March, be approved.

Orders of the Day — BUSINESS OF THE HOUSE

Ordered,

That, at the sitting on Wednesday 15th May, Standing Order No. 10 (Wednesday sittings) shall have effect with the following variations: in paragraph (1) in place of the words 'two o'clock' shall be inserted 'half-past ten o'clock and between one o'clock and two o'clock'; in place of paragraph (5) shall be inserted 'Not more than two subjects shall be raised between half-past nine o'clock and half-past ten o'clock and not more than two subjects shall be raised between one o'clock and two o'clock'; and the Speaker shall suspend the sitting on that day between half-past ten o'clock and one o'clock.—[Mr. McLoughlin.]

Orders of the Day — NATIONAL HERITAGE

Ordered,

That Mr. Michael Fabricant be discharged from the National Heritage Committee and Sir Mark Lennox-Boyd be added to the Committee.—[Sir Fergus Montgomery, on behalf of the Committee of Selection.]

Orders of the Day — Hospital and Dental Services (Southampton)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. McLoughlin.]

Mr. John Denham: I am grateful, at this late hour, for this debate, because in the past year a series of problems in the hospital and dental services in Southampton and South West Hampshire health authority area has caused mounting concern about the future of our local NHS. I cannot mention all the problems tonight but I hope that I can raise enough to make the Minister realise that they are not minor or isolated problems but are part of a pattern that is making people in Southampton ask where their health service is going. It is a pattern of cuts in vital services—a two-tier health service in which who pays for care is more important than how ill people are.
These examples are a case study of the problems inherent in the Government's management of the national health service. and especially in their health market. I shall deal briefly with the situation in the Southampton University Hospitals NHS trust and the Southampton and South West Hampshire health authority, and touch on the state of dental services in that health authority area.
I have three points at the outset. I am not trying to suggest that no one is treated well in the local hospital service or that no one is looked after or gets better in Southampton hospitals—of course many people receive a high standard of care every day—but I will say unambiguously that that quality of care is now under serious threat. I do not criticise the staff at any level. I have no doubt that all the people involved in the hospital services and the health authority are working as hard as they can, often against the odds and under considerable pressure. I recognise the openness with which the Southampton University Hospitals NHS trust and the health authority have responded to my inquiries and requests for information. It is perhaps true, in part, that that makes it easier to document the problems we face in Southampton, but that is no bad thing.
The background to the current problems is the trust's financial crisis. It faces an £11 million shortfall in the current financial year, but the financial pressures have been building for some time. I shall give some examples. Fred Woolley house, a much-loved national health service convalescent home, was closed for a period up to April this year to save money. It has been temporarily reopened, but the trust makes little secret of its desire to close it permanently. It fills a much-needed role in the local health service. It offers recuperative care, often for people who have undergone major traumatic surgery. It is a vital bridge between hospital care and a return to a life at home. There is a local campaign to save Fred's, and I give it my full support.
If that service goes, we all know what will happen. Some people will be discharged to their own homes too early, increasing the pressures on families and general practitioners. Some will, inevitably, return to hospital.
I visited the accident and emergency unit at the general hospital recently. Again, I was impressed by much of what I saw, but it was emphasised to me how many of the elderly people admitted as emergencies in late


December and January—at a time when such admissions hit the national headlines throughout the country—had been discharged from hospital prematurely.
The stress on GPs is building up. One local GP wrote to me this week:
There is an overall increase in our workload, much of which is driven by the desire of the hospital trust to reduce its costs by passing work without accompanying resources to primary care.
Needless to say, the financial crisis leaves resources and facilities unused. A ward in the Tom Rudd unit at Moorgreen hospital, which could be providing rehabilitative care, lies empty. Again, the result will be early readmissions to hospital, a new burden on families to care or admission to a residential care home with perhaps another home sold to pay the costs.
On 29 April, following a similar move last year, the health authority wrote to GPs further restricting their ability to make extra contractual referrals. Once again, the GP's ability to refer patients to the most appropriate provider of care has been restricted.
We hear a lot about funding for the national health service from the Government, but that letter from the health authority to GPs make it clear that
The financial difficulties facing the NHS in the coming year are probably more severe than at any time since the reforms were implemented.
Does the Minister agree with the health authority and that statement? If not, why does he think that it is wrong when that view is shared throughout the local health service?
The ability of the Southampton University Hospitals trust to meet the needs of children who need emergency care is also being restricted. As The Southern Daily Echo reported last December:
Sick children needing emergency treatment are regularly diverted to hospitals in Poole and Portsmouth, while eight paediatric beds are lying empty and unused at the city's General Hospital.
Apparently, children had been diverted to other hospitals at least twice a month from the beginning of that financial year. All too often, we have had reports of mothers and newly born babies being sent from hospital to hospital across the south in the search for intensive care cots.
Care of the terminally ill has been yet another cause for concern. Dr Roger Ryall, clinical director of cancer care for the trust, spoke of his fears when faced with demands to make a cut of £800,000 in his budget and, in particular, on the impact that that will have on the terminally ill. He is quoted as saying:
If we are forced to make these cuts, what will happen is that we will be much less able to buy time for people.
There are two categories of treatment—a lot of patients can be cured now and live a long time. We have to protect services for those people.
Where we will not be able to give such a comprehensive service is for people for whom we buy time—patients who know from the day they arrive we cannot cure because it is too extensive.
It is indeed alarming and appalling that senior clinicians are forced to talk publicly about reducing the level of care offered to the terminally ill.
Dr. Rya11's comments are those of one clinician faced with the impact of cuts on the services that he is trying to provide, but we can have little doubt that all his colleagues feel much the same about their areas of duty and responsibility.
At present, the trust is in the process of shedding the equivalent of more than 370 full-time jobs. The bulk of those will fall directly in areas of front-line patient care. More than 350 care staff will go from the clinical directorate, about 18 from hospital services such as pathology and one from management. Is that not depressingly familiar in a national health service that, since 1989, has had 50,000 fewer front-line staff and 18,000 more managers? Those running the trust and the health authority make it quite clear to me that the growth in administrative and management jobs is a direct result of the internal health market. The billing for care, the need to resolve disputes about bills that have been sent out and many other activities all eat into the resources available for front-line care.
At this point, the Minister may say that I have simply given a list of cuts, and that he hears this story all day, long. However, I want to emphasise not only the damaging nature of the cuts but what they mean for the way in which the health service in Southampton is being twisted and distorted to meet the needs and demands of the health market forced on to the health service locally.
On top of the impact of the cuts—alarming as they are—is the reinforcement of a symptom that has become all too common in the hospital service in Southampton. I refer to the development of a clear, unambiguous two-tier system—a service in which what care one receives and, in particular when one receives it, is governed not by how ill one is but by where one lives and who is paying for care. We witnessed that locally last year.
I am disappointed that he is not answering this debate, but the hon. Member for Winchester (Mr. Malone)—our local Health Minister, if I may call him that—was made well aware of one particular problem last October: the cancellation of non-urgent orthopaedic operations. He will remember being challenged by a Mr. Bridle when he visited Southampton last year. Mr. Bridle was just one of many patients whose expensive operations were put on hold. In that case, as in others, operations were prioritised, not according to clinical need but according to cost. That is just one example of cost pressures overruling clinical need.
From last October, routine gastroscopy services were withdrawn from the patients of non-fundholding GPs, although the services available to fundholding GPs were not similarly affected. Under recent contracts, heart patients living in Southampton face waits of up to twice as long for treatment at the city's general hospital as patients with the same condition in Portsmouth and Bournemouth. Bournemouth patients coming to Southampton face a maximum delay of four months; Portsmouth patients coming to Southampton face a maximum delay of six months; but Southampton patients in their own local hospital face a wait of up to nine months.
It is simply unfair and unjust that people with the same conditions and the same needs, whose wait for surgery imposes the same limits on their lives and activities, and who suffer the same fears and anxieties, wait for different lengths of time for the same treatment by the same doctors in the same wards of the same hospital. Why does this happen? It happens as a direct result of the workings of the internal market. These effects are not endemic across the country, but they are felt with particular force in


Southampton because of the very size of the Southampton University Hospitals trust in relation to the main purchasers.
The local health authority purchases only about half of the care provided by the Southampton hospitals. That means that when the major local hospital trust runs into financial problems, it turns to the health authority for assistance. That in turn means that all the burden of bailing out the hospital falls on one purchaser, and in particular on the patients whose care is being bought by the health authority. In effect, the trust looks to half its patients to carry the costs of all its financial problems. That is precisely what the Southampton University Hospitals trust has tried to do.
The trust has a shortfall of £11 million. It said that it would make £5 million worth of savings itself, and I have listed some of the consequences of the cuts involved. It then turned to the Southampton and South West Hampshire health authority with a request for the other £6 million.
The internal market means that smaller purchasers, fundholders, other health authorities and those with the greatest freedom to go elsewhere can continue to demand the higher level of service. The health authority is trapped. If it demands the same level of service for its patients as other purchasers, it can bankrupt the trust and close the hospital, but that "nuclear option" is clearly impossible. In practice, it could not find the £6 million that the trust was seeking. Instead, it had to settle for a second-rate service for its patients.
The health authority could not afford to bail out the hospital, so it had to agree to a reduction in the level of patient care. The health authority has agreed that waiting times should be allowed to double from the current maximum of nine months to a maximum of 18 months allowed by the patients charter. This applies only to health authority patients. As I have said, the health authority's waiting times are already longer than those of many other purchasers.
This decision has created a new type of patient in Southampton hospitals: the red star patient. There are 191,000 red star patients in the Southampton area who have their care paid for by the health authority. Admission staff and consultants have literally been told to stick a red star on their files. In relation to the red stars, a letter from the trust states:
it would then be necessary to inform these patients in the clinic that they are effectively on the end of the waiting list.
I ask the Minister a simple question: is this what the Government's health reforms were intended to create—191,000 red star patients at the end of the waiting list, regardless of their needs or their condition? I declare an interest in this regard: I do not have a fundholding general practitioner, nor do my children—we are at risk of becoming red star patients, at the end of the queue.
In my constituency, 14 practices became fundholders as a multi-fund this year. That is not surprising, given what is happening. I know that, for many, this was a least-worst option and an agonising decision. This does not solve the problem. The more doctors who choose this option, the greater the pressure on the health authority when the trust is in financial crisis and the greater the pressure to produce a two-tier service as the number of purchasers fragments further.
I ask the Minister: how can he justify to 191,000 people, including me and my children, that they should be sent to the back of the queue? I do not put the blame on the health authority—it has a wide range of responsibilities. As it has made clear, if it had not agreed to these changes, emergency and urgent treatment would have suffered. There are other pressures: on services for elderly people, for people with mental health problems and for people with learning disabilities. The problem lies with the Government and their approach to managing health care.
Similar problems are apparent in the dental service in the Southampton and South West Hampshire health authority area. I have already sent the Secretary of State a copy of the report recently published by the local community health council. However, I should like to take a few moments to highlight its main conclusions. More children suffer from serious dental decay in my constituency than in almost any other part of the country. Dental illness is a serious problem for them.
In fairness, I welcome the recent appointment of a salaried dentist to serve the city centre parts of my constituency. However, NHS dentistry is becoming more and more difficult to obtain in my constituency and in the wider health authority area. In some villages around Southampton, no NHS dental service is available. In Southampton, there is no dental practice able to accept NHS patients in Townhill Park. This is a direct consequence of the so-called knock-on effect. That practice has accepted NHS patients from Hedge End, outside the city, where there is no NHS service. However, this means that the practice has had to refuse new registrations from local people. As the number of NHS dentists reduces, so the scrabble to remain with the remaining practices intensifies. No emergency service is available in Bitterne, Bassett, Bitterne Manor, Bitterne Park and St. Denys.
Those who responded to the community health council expressed grave concern about dentists who require them to register as private patients to secure NHS care for their children. Many people who are receiving private dental treatment are doing so not from choice but because they are unable to find a local NHS dentist or to travel to their nearest NHS dentist. I have carried out two surveys of local dentists since I was elected. They confirm that more and more dentists are moving out of NHS care either entirely or with restrictions on their lists. Every time this happens, the pressures on the remaining NHS dentists grow.
I conclude by asking the Minister whether he recognises the growing pressures on NHS dentistry in my area. Does he accept that, in practice, a significant number of Southampton residents are unable to obtain NHS dental care? If he does, what does he intend to do about it?
The story of my local health service is now one of a service that is not available equally to everyone. That service does not offer care according to a person's need. It operates a hospital service according to which people wait longer if they have the wrong doctor or live in the wrong area. The local dental service is such that people may not be able to obtain NHS dentistry or will have to pay privately if their children are to get NHS care. I do not believe that the NHS in Southampton is safe in the Government's hands.

The Parliamentary Under-Secretary of State for Health (Mr. John Horam): I am glad to have the opportunity to respond to the Adjournment debate of the hon. Member for Southampton, lichen (Mr. Denham).
First, I note that the hon. Gentleman acknowledged the excellent work done particularly by the Southampton University Hospitals NHS trust, working in partnership with local purchasers. The Government have honoured their manifesto pledge to increase health spending in real terms every year, and new spending plans announced in the Budget mean that total spending by the NHS in England has increased from £6.5 billion in 1978–79, to £34.7 billion this year. That is equivalent to a real-terms increase of 72 per cent. since 1978–79.
The hon. Gentleman will be aware of some of the implications of that funding for Southampton. For example, a new £10 million hospital development for elderly people was opened on the former Southampton Western hospital site in January. It will provide 104 beds. Secondly, three neurosurgical theatres are being built at Southampton General hospital, at cost of £6 million, and are due to open in the summer. Thirdly, that funding will allow for cardiac expansion, including extra ward and intensive care unit capacity at Southampton University Hospitals NHS trust, which will be ready in the autumn. Those three items of capital expenditure are being funded by the huge increase in the budget for the NHS.
At the end of last year, the vast majority of patients in Southampton—more than 98 per cent.—were seen within nine months, and only five people had been waiting for more than 12 months. The hon. Gentleman may be aware that the Southampton University Hospitals trust was the first university teaching trust in the United Kingdom to achieve the excellent nine month standard. I believe that the hon. Gentleman will agree that that achievement compares rather well with the patients charter standard of 18 months. Southampton is therefore succeeding in setting and achieving a much tighter and more challenging standard for its own population. Overall, general and acute sector episodes of care completed by the trust have increased by more than 20 per cent in the past three years—a quite remarkable achievement.
I acknowledge that that level of activity has caused some financial problems in the trust recently, but I am sure that the trust, the health authority and the NHS executive south and west regional office are currently discussing an agreed strategic approach to address that problem. It would therefore be inappropriate for me to comment in any detail on the issue now, but I understand that emergency and urgent work will be unaffected, although there may some slippage in waiting times as the financial problems are resolved.
The health authority will retain its standard of nine months' waiting time, but it recognises that it may have increasing difficulty in maintaining that standard. The health authority and the trust have a long and strong strategic relationship, and I am confident that they will be able to agree on a way forward.
Secondly, may I deal with the hon. Gentleman's points about two-tierism? As the internal market develops, fundholders are improving services for their patients and

others are following their example. Having a range of purchasers—health authorities and GP fundholders—stimulates innovation and critical consideration of service delivery to the benefit of all patients. Joint guidance issued by the Department of Health and the profession in June 1991 clearly states that hospitals should not offer contracts to one purchaser to the disadvantage of patients of another. All emergencies are seen immediately, and all urgent cases that cannot be seen immediately are placed on a common waiting list.
The amount of hospital activity purchased will always depend to some extent on the skill of the purchaser. All purchasers need to learn from that and ensure that they place equally good elective contracts on behalf of the patients of non-fundholding GPs. Inevitably, when driving up standards, some improve before others. Our aim is to bring the quality of all services up to the standard of the best.
Thirdly, the hon. Gentleman spoke about dentistry in Southampton. We have a good record, which is demonstrated by the figures, which speak for themselves. For example, expenditure on the general dental service between 1978–79 and 1994–95 has grown by nearly 60 per cent. in real terms. In 1994–95, courses of adult treatment had increased by 7.6 million from a similar figure for 1979, and there had been a 33.7 million increase in adult examinations in the same period.
I am aware that, in parts of the Southampton area, there are currently no NHS adult services for new patients. I have seen the recent Southampton and South West Hampshire community health council report on dental health services in the area, which the hon. Gentleman mentioned, and I do take it seriously. I understand that the health authority has already responded to that report, and I know that the hon. Gentleman has sent a copy to my right hon. Friend the Secretary of State for Health, who will reply to him in due course.
The hon. Gentleman may wish to know that 59 per cent. of the adult population of Hampshire are registered with an NHS dentist. That compares favourably with the national average, which is less than that—57 per cent. The health authority runs a very efficient dental helpline service to assist patients with access to NHS dentists and to help unregistered patients in an emergency.
As the hon. Gentleman acknowledged, the health authority has already appointed one salaried dentist, in November 1995, in Southampton. I would not pretend that that addresses the whole problem, but I understand that the health authority intends to apply to my Department for a further five salaried posts to cover the areas where there is at present no NHS cover. In addition, there is an emergency dental service based at Southampton general hospital. The service has been increased from two half-day sessions per weekend to full-time sessions at weekends and on bank holidays. I understand that those may be extended to some weekday evening sessions, so the problem is being tackled locally.
It would be incomplete of me to cover the changes that we are introducing in the general dental service without mentioning the reforms that my hon. Friend the Minister for Health announced last year. The hon. Gentleman mentioned him, so I may bring him into the debate as well. That was a comprehensive package of across-the-board reforms, the product of extensive study and wide consultation following on from the 1994 Green


Paper, "Improving NHS Dentistry". We are working on the reforms with representatives of the dental profession, and I believe that they will deliver concrete improvements in general dental services and help the NHS to tackle the oral health challenges ahead as well as providing stability and security for dentists.
All that will provide a strong framework in which the general dental service can continue to develop throughout the country—in Southampton and elsewhere.

Question put and agreed to.

Adjourned accordingly at one minute past Twelve midnight.